Thu, Apr. 21, 4:29 PM
- Ad price declines pressured Alphabet/Google's (GOOG, GOOGL) Q1 results: Cost per click (CPC) was flat Q/Q but down 9% Y/Y. The company has previously said YouTube video ad growth has depressed CPCs; relatively low smartphone search ad prices have also been an issue. CPCs fell 12% on Google sites and 8% elsewhere.
- Paid clicks: Ad click growth remains strong: Paid clicks were down 3% Q/Q (seasonality) but up 29% Y/Y, a growth rate nearly even with Q4's 31%. Paid clicks rose an impressive 38% on Google sites (YouTube, mobile search, and shopping search ad growth), and just 2% on other sites, where ad policy changes and competition from Facebook have weighed.
- Segment performance: Google segment revenue rose 17% Y/Y to $20.1B; op. profit rose 21% to $6.3B. The Other Bets segment (dominated by Nest/Dropcam, with Google Fiber also playing a role) saw revenue rise 108% to $166M; op. loss grew to $802M (nearly 5x revenue) from $633M. Forex had a 600 bps impact on total revenue growth (+17% vs. +23%).
Within the Google segment, Google sites ad revenue rose 20% to $14.3B, and Network sites ad revenue 3% to $3.7B. Other revenue (Google Play, hardware, etc.) rose 24% to $2.1B.
- Financials: Traffic acquisition costs were 21% of Google ad revenue vs. 22% a year ago. Cost of revenue was 38% of revenue vs. 37%, and operating expenses 36% vs. 37%. Stock compensation expense totaled $1.5B vs. $1.2B. The tax rate fell to 18% from 24%, and headcount grew by nearly 9K Y/Y to 64,115.
$2.3B was spent to buy back 3.2M shares. Notably, capex fell 17% Y/Y to $2.4B. That, along with revenue growth, helped free cash flow rise 37% to $5.2B. Google/Alphabet ended Q1 with $75.3B in cash/investments (much of it offshore) and $5.2B in debt.
- GOOG -5% after hours to $720.25. GOOGL -4.6% to $743.95.
- Q1 results, earnings release (.pdf)
Thu, Apr. 21, 4:03 PM| Thu, Apr. 21, 4:03 PM | 87 Comments
Wed, Apr. 20, 5:35 PM
Thu, Apr. 14, 3:04 PM
- Google parent Alphabet (GOOG +0.5%, GOOGL +0.7%) reports earnings after the close next Thursday, and Goldman Sachs sees mobile and YouTube driving its strength.
- Analyst Heather Bellini says checks suggest net ad revenues will likely come in at $14.7B, above a $14.4B consensus, with overall net revenue (ex-TAC) of $16.7B.
- “Partners said that smartphones continue to drive click volume and PLAs were cited once again as coming in above expectations,” she says. She's got a price target of $890 (Buy rated), reflecting near 18% upside.
- Meanwhile, Wedbush (which is Neutral on the stock) today raised its estimates for Q1, seeing gross revenue up 18.3% (Google Sites up 22%), incorporating about a three-point drag from forex considerations vs. six points in Q4.
- Wedbush looks at a number of emerging positive catalysts, including mobile monetization improvements, YouTube ad gains from TV, and greater visibility on expenses from the Alphabet reorg. It's raised its price target on shares to $840 from $830.
- Earlier this week, Pivotal Research upgraded Alphabet to Buy and jacked its price target to $970 (a 28.5% implied upside) from its previous $800.
- Now read Alphabet: New Name, Same Strong Performance »
Mon, Feb. 1, 5:58 PM
- With strong mobile growth providing a lift, Gmail has topped 1B monthly active users, Alphabet/Google (GOOG, GOOGL) disclosed on its Q4 call. The e-mail service had 900M MAUs as of last May. Other Google offerings with 1B+ MAUs: Search, Android, YouTube, Maps, Chrome, and Google Play. (live blogs: WSJ, MarketWatch)
- Regarding surging paid click volumes (up 31% Y/Y in Q4, with 40% growth on Google sites), Google once more mentioned the impact of YouTube's TrueView ad format - a video ad viewed from start to finish is considered a paid click. CFO Ruth Porat mentioned ad format changes served to lower ad prices and boost clicks, and declared both mobile and PC ad monetization to be healthy.
- Porat urged analysts to look at the performance of Google's Other Bets segment - it had 2015 revenue of $448M and op. loss of $3.57B - on an annual basis rather than a quarterly one, and insisted Google is being efficient with its investments. Nest, Fiber, and the Verily life sciences unit are said to be the main revenue-generating parts of the Other Bets segment.
- She added capex is expected to grow again 2016, after surprisingly dropping in 2015 to $9.9B (equal to 13% of revenue). In addition to Google's data center infrastructure, Fiber and other bets will be an area of focus for capex.
- Also mentioned: 1) Spending from Google Play store buyers rose 30% in 2015. 2) U.S. revenue rose 24% Y/Y, and U.K. revenue (hurt some by a strong dollar) 16%. Forex had a $1.3B revenue impact, or $1B after factoring currency hedges. 3) Google is pushing for exclusive content for the YouTube Red subscription service. 4) ~$43B of Google's $73.1B cash balance is overseas.
- GOOG +5.5% after hours to $793.00. GOOGL +5.4% to $812.00.
- Google/Alphabet's Q4 results, Q4/2015 details
Mon, Feb. 1, 4:32 PM
- Alphabet/Google's (GOOG, GOOGL) Other Bets reporting segment, broken out by itself for the first time, had 2015 revenue of $448M (+37% Y/Y), and an operating loss of $3.57B (up from $1.94B in 2014). The segment's Q4 revenue totaled $151M (+42% Y/Y), and its op. loss $1.1B. Other Bets includes Google Capital, Google Fiber, Nest, Calico, and the Google X long-term R&D unit, among other things.
Core performance: Core Google (includes Google search, display ads, Maps, YouTube, and Android) had 2015 revenue of $74.5B (+13% Y/Y) and op. income of $23.4B (+23%). The segment's Q4 revenue rose 18% to $21.8B - Google sites revenue +20% to $14.9B, Google Network revenue +7% to $4.1B, other revenue (Google Play, hardware, etc.) +24% to $2.1B.
Paid clicks (boosted by YouTube, mobile search, and Google Shopping) rose a strong 17% Q/Q (lifted some by seasonality) and 31% Y/Y - Y/Y growth accelerated sharply from Q3's 23% and Q2's 18%, and was well above expectations of 22-23%. Google sites paid clicks +40% Y/Y, Google Network clicks (hurt by competition and quality control efforts) +2%. Cost per click (ad prices) fell 5% Q/Q and 13% Y/Y, worse than expectations for a ~6% drop. Google sites cost per click -16% Y/Y, Google Network -8%.
- Forex/TAC: Forex had a 600 bps impact on Q4 revenue growth (+18% Y/Y vs. +24%). Traffic acquisition costs were 21% of revenue vs. 22% a year ago.
Financials: $1.8B was spent in Q4 to buy back 2.4M shares. Operating expenses were 36% of revenue vs. 37% a year ago - R&D spend rose to $3.5B, sales/marketing to $2.7B, and G&A to $1.6B. Cost of revenue was 38% of revenue, same as a year ago. Boosting EPS: The effective tax rate was just 5%, down from 18% a year ago. Headcount rose 15% Y/Y to 61,814.
Capex totaled $2.1B in Q4, and $9.9B over the whole of 2015 (down from $11B in 2014). Q4 free cash flow was $4.3B (up from $2.8B a year ago). Alphabet ended 2015 with $73.1B in cash (much of it offshore) and $5.2B in debt.
- GOOG +5.1% after hours to $790.50. GOOGL +5.4% to $812.40. For now, Alphabet/Google has passed Apple to become the most valuable traded U.S. company.
- Alphabet's Q4 results, PR, earnings release (.pdf)
Mon, Feb. 1, 4:03 PM
- Alphabet (NASDAQ:GOOG): Q4 EPS of $8.67 beats by $0.58.
- Revenue of $21.33B (+17.8% Y/Y) beats by $560M.
- Shares +6.4%.
Sun, Jan. 31, 5:35 PM
Thu, Jan. 28, 8:52 AM
- Amazon (NASDAQ:AMZN) is up 3.7% premarket, Google/Alphabet (GOOG, GOOGL) up 2.2%, and Netflix (NASDAQ:NFLX) up 2.5% after fellow FANG trade member Facebook (up 14.7%) trounced Q4 estimates on the back of 57% Y/Y ad revenue growth. Nasdaq futures are up 0.6%.
- Separately, eBay, which has been losing share to Amazon and others for some time, is down 12.1% after issuing soft Q1/2016 guidance to go with in-line Q4 results. eBay's GMV was flat Y/Y at $21.9B, with Marketplace GMV dropping 3% to $20.7B.
- eBay spinoff PayPal is up 4.8% after beating Q4 estimates with the help of a 23% Y/Y increase in payment volume to $81.5B, and issued in-line Q1/2016 guidance.
- Amazon's Q4 report arrives this afternoon, and Google's on Monday afternoon. Last week, Netflix reported mixed Q4 results and strong subscriber adds.
Oct. 26, 2015, 6:26 PM
- InterActiveCorp (NASDAQ:IACI) has used its Q3 report to announce it has extended its Google (NASDAQ:GOOG) search deal for 4 years to March 31, 2020. In an arrangement that echoes Google's recent deal with Yahoo, Google will provide Web and image search results for IAC properties and partner sites on PCs and mobile, as well ads via its AdSense for Search and AdSense for Content platforms.
- The deal is exclusive regarding "the placement of similar search-based advertisements on designated properties and applications" on PCs, but is otherwise non-exclusive. Google will pay IAC a cut of related ad revenue. (8-K filing)
- IAC's Q3 report brings with its fresh numbers for Match Group (Pending:MTCH), which recently filed to go public. Match had Q3 revenue of $274.2M (+19% Y/Y), adjusted EBITDA of $84.3M (+37%), and op. income of $71.9M (+8%). Match's dating revenue rose 11% to $158.6M; non-dating revenue rose 108% thanks to the Princeton Review acquisition.
- Dating paid subscribers rose 16% Y/Y to 4.18M, with North American subs rising 7% to 2.64M and international subs 34% to 1.53M.
- Search & applications division (Ask.com, About.com, Ask.fm, and other properties) revenue fell 4% $277.1M. Web site revenue fell 10% to $188.1M; applications revenue rose 2% to $189M. Segment op. income fell 19% to $65.4M.
- Media revenue (Vimeo, Electus) rose 15% to $57.3M; op. income improved by $400K to -$8.3M. E-commerce revenue rose 21% to $130M thanks to HomeAdvisor's growth; op. income improved to $4.2M from -$1.6M. HomeAdvisor domestic service accepts rose 40% to 3.03M; international accepts fell 4% to 406K.
- IACI -0.8% after hours to $67.00.
- Q3 results, PR
Oct. 22, 2015, 5:18 PM
- Seven months after naming Ruth Porat its CFO, Google/Alphabet (GOOG, GOOGL) is ready to begin returning capital. A $5B buyback, good for repurchasing ~1% of shares, has been launched. The buyback covers the non-voting Class C shares (NASDAQ:GOOG).
- Google had $72.8B in cash/marketable securities at the end of Q3, and just $5.2B in debt. However, much of the cash is offshore.
- On the earnings call (live blog), management has talked up YouTube ad growth, and suggested it has much to do with both Google's strong paid click growth and declining cost per click. The remarks come a day after a $10/month ad-free YouTube/Google Music service was unveiled.
- New Google CEO Sundar Pichai states Google has indexed over 100B deep links within 3rd-party apps, as it tries to head off the threat posed by mobile users bypassing search in favor of going directly to apps. 40% of mobile searches now have in-app results within their top 5 results.
- Pichai reiterates mobile now accounts for over 50% of searches. He also notes over 20M Chromecast devices have been sold to date.
- GOOG +11.1% after hours. GOOGL +9.6%. Both share classes have made fresh highs.
- Q3 results, details
Oct. 22, 2015, 4:27 PM
- Google/Alphabet's (GOOG, GOOGL) paid clicks rose 6% Q/Q and 23% Y/Y in Q3, after having grown 18% in Q2 and 13% in Q1. Clicks on Google sites (boosted by YouTube and mobile search) rose 7% Q/Q and 35% Y/Y. Clicks on partner sites (hurt by quality control efforts and competition) were flat Q/Q and down 5% Y/Y.
- Ad prices: Cost per click (CPC - hurt by relatively low smartphone ad prices and YouTube growth) remained under pressure, dropping 1% Q/Q and 11% Y/Y. Google site CPC -2% Q/Q and -16% Y/Y; partner CPC +1% Q/Q and -4% Y/Y.
- Segment/regional performance: Ad revenue from Google sites +6% Q/Q and +16% Y/Y to $13.1B. Partner site ad revenue +2% Q/Q and +4% Y/Y to $3.7B. Other revenue (Google Play, Nexus hardware, Nest, Fiber, etc.) +11% Q/Q and Y/Y to $1.9B. The U.S. was 47% of revenue, up from 44% a year ago; the U.K. remained 10% of revenue.
- Forex/TAC: A strong dollar had an 8% impact on revenue growth (+13% vs. +21%). $286M worth of forex hedging gains were recorded. Traffic acquisition costs were 21.3% of revenue vs. 21.1% in Q2 and 22.6% a year ago.
- Financials: Non-GAAP cost of revenue fell to 36% of revenue from 37% a year ago. Operating expenses remained 31% of revenue - R&D was 13%, sales/marketing 11%, and G&A 7%. Capex fell slightly Y/Y to $2.37B, and free cash flow totaled $3.63B (below net income of $5.1B). The effective tax rate was only 19%, down from 24% a year ago.
- GOOG +9.9% after hours to $716.00. GOOGL +8.2% to $737.07.
- Q3 results, PR, slides (.pdf)
Oct. 22, 2015, 4:05 PM
- Alphabet (NASDAQ:GOOG): Q3 EPS of $7.35 beats by $0.14.
- Revenue of $18.67B (+13.0% Y/Y) beats by $140M.
Oct. 21, 2015, 5:35 PM
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Jul. 17, 2015, 10:42 AM
- Axiom Securities has upgraded Google (GOOG +13.4%, GOOGL +14.8%) to Buy following the company's Q2 beat and investor-pleasing comments about spending discipline, potential capital returns, and YouTube/mobile growth. MKM has launched coverage at Buy, and plenty of other firms have hiked their targets. Google's market cap is now above $450B.
- Deutsche's Ross Sandler: "We think this could be the dawn of a new era for shareholders. Google is showing investors that its management team (even pre-Ruth Porat) cares deeply about its stock price and talent retention. We've long held that innovation is alive and well, and the narratives around irrelevance in mobile or share loss to Facebook that weighed on the multiple were somewhat misguided ... We have increased our 2016 EPS by 7%, and we expect the multiple to expand..."
- Credit Suisse's Stephen Ju: "YouTube is starting to contribute more meaningfully to revenue as it helped to drive acceleration in paid click growth to +30% (vs. 1Q15 25%) as well as U.S. revenue growth to 16%. Google Play was in-line with our estimate, suggesting it continues to grow at ~35% on an FX-neutral basis. As we have noted earlier, we continue to see clear indications of these two emerging business lines exerting greater impact..."
- MKM's Rob Sanderson: "The growth story is very much alive. However, we think that solid expense control and discussion of disciplined capital allocation going forward were the more material drivers of the stock gains." His list of potential long-term growth drivers includes "mobile's ability to influence the 90% of retail transactions not online, video ad dollars migrating online, monetization of mobile apps, and new ad products."
- BMO's Daniel Salmon, who upgraded ahead of earnings yesterday: "[W]e felt the most important elements were: 1) investor interest was piqued by comments about potential capital return when considering financing options; 2) the acceleration of YouTube metrics across the board ... 3) CBO Kordestani’s emphasis of the billion+ user bases for YouTube, Chrome, Android, Search, Maps, etc. sounded very much like the 'portfolio of apps' strategy/messaging that has served Facebook so well. While we tepidly stepped into this recommendation yesterday, our conviction is now much stronger..."
- Prior Google coverage, CC transcript
Alphabet, Inc. is a newly founded holding company for the Google group of businesses. Under the new operating structure, its main Google business will include search, ads, maps, apps, YouTube and Android and the related technical infrastructure (the 'Google business'). Businesses such as Calico,... More
Industry: Internet Information Providers
Country: United States
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