Alphabet this afternoon reported Q1 2019 net income of $6.6 billion on $36.33 billion in revenue. The stock is down over 7% in after-hours trading following a revenue miss. During the earnings call, Alphabet CFO Ruth Porat noted a similar decline for Pixel sales. Google also confirmed the May 7th hardware announcement for I/O 2019.
According to the CFO, “hardware results reflect lower Year-on-Year sales of Pixel reflecting in part heavy promotional activity industry-wide given some of the recent pressures in the premium smartphone market.”
Google does not break out hardware results in earnings, but merges them into an “Other revenues” category that also includes Play Store and Cloud. For Q1 2019, it reported $5.4 billion compared to $4.3 billion the same quarter last year.
With respect to hardware results, while the first quarter results reflect pressures in the premium smartphone industry, we are pleased with the ongoing momentum for Assistant-enabled home devices, particularly the Home Hub and Mini devices and look forward to our May 7th announcement at I/O from the hardware team.
The decline in the premium smartphone market comes as Google is rumored to be releasing a mid-range Pixel 3a and Pixel 3a XL.
Porat was optimistic about Google Home and Assistant-powered smart devices. The often discounted Home Hub and Home Mini were touted as best sellers, with the CFO confirming that the May 7th announcement will be at I/O. The Google Store teaser earlier this month only provided a date that coincides with Day 1 of I/O 2019, but did not establish whether the announcement was happening on stage.
Later during the call, Sundar Pichai noted how “demand for our Google Home family of products remains strong.” He teased how the company will “continue to develop this incredible lineup” from Pixel, Nest, and Home.”
“We are still early in our hardware journey. And when I look ahead at the portfolio that we created across Pixel, Home, and Nest, I feel really good about the range of products that we have.”