Tue, Apr. 28, 10:29 PM
- On a day that it posted a Q1 sales miss (a little ahead of schedule) and cut its full-year guidance, Twitter (NYSE:TWTR) announces it's partnering with Google's (NASDAQ:GOOG) DoubleClick unit (a giant in the display ad space) to allow Twitter advertisers using DoubleClick to "measure when conversions result from views and other actions on Twitter."
- Notably, Twitter/DoubleClick plan to give advertisers "a new attribution model in DoubleClick to get a fuller understanding of how Twitter Ads served on mobile or desktop drive conversions for them across the web." That could point to the (anonymous) use of Twitter profiles to track ad conversions. Also: The companies plan to make Twitter ad inventory available through DoubleClick Bid Manager, a widely-used ad-buying platform supporting many online ad exchanges.
- The addition of Twitter as a partner is a notable win for DoubleClick as it tries to fend off Facebook (NASDAQ:FB), which last fall launched a new version of its Atlas ad server/measurement platform that tracks the performance of ads seen by Facebook users both on its site/apps and others. Facebook is counting on its anonymous linking of user profiles with ad measurement to give it an edge against DoubleClick and other rivals relying on cookies.
- Meanwhile, Twitter's Q1 CC (live blog) failed to cheer up investors. The company mentioned Q2 user growth is off to a "slow start," and that ad click rates (CTRs) declined Q/Q in Q1 due to a mix shift towards formats with lower CTRs. Ad load was flat, and app install ads (a format Facebook has seen huge success with) underperformed.
- On the bright side, CEO Dick Costolo noted more than 1M people signed up for Twitter's Periscope live-streaming app in its first 10 days, that the company has seen "orders of magnitude" more native video on its site following the launch of a 30-second video platform in January, and that it's working with Apple on a Spotlight search integration deal. CFO Anthony Noto stated Twitter will begin counting users of its SMS follow service (there are currently ~6M) as MAUs.
- Twitter fell 1.6% in AH trading after dropping 18.2% in regular trading on account of its results. Shares are now at $41.58.
- Three months ago: Google, Twitter strike deal to add tweets to search results
Fri, Apr. 24, 5:14 PM
- Thanks to a better-than-feared Q1 report that included lower-than-expected spending figures, Google (NASDAQ:GOOG) rallied to its highest levels of the month today. Class C shares are now up 16% from a January low of $487.56, and 6% below a 52-week high of $599.65.
- At least 6 firms have hiked their targets. Deutsche's Ross Sandler (Buy) notes net profit margin was flat in Q1 "after imploding for three years," something he attributes to both cost discipline and management changes.
- Looking at the top-line, Morgan Stanley (Equal-Weight) is worried U.S. revenue growth slowed to 11% Y/Y (the slowest pace since Q4 2009). With YouTube having likely grown over 40% Y/Y, MS thinks U.S. search revenue (higher-margin) was only up 9%-10%.
- On the CC (transcript), CFO Patrick Pichette stated a mix shift towards YouTube ads - any un-skipped video ad is counted as a click - was pressuring Google's ad prices (CPCs), and not mobile. "Excluding the impact of YouTube TrueView ads, growth in site clicks would be lower, but still positive, and our CPCs would be healthy and growing year-over-year." Sales chief Omid Kordestani noted YouTube's TruView advertiser count rose 45% in 2014.
- BofA/Merrill (Buy) is pleased with the CPC disclosure, as well as sales growth and margin stability. "We continue to see opportunity for sentiment improvement on new products (I/O in May), anticipation of new CFO, spending trajectory change, and YouTube strength.
- Meanwhile, eyewear maker Luxottica has announced it's working with Google on a commercial version of Google Glass that will launch soon (no ETA is given). Sales of the $1,500 Explorer Edition ended in January.
- Glass chief Ivy Ross previously stated the next version will be cheaper, have a longer battery life, and a better display and sound quality. Himax (NASDAQ:HIMX) is expected to remain Glass' microdisplay supplier, and Intel is expected to be its CPU supplier. Eric Schmidt affirmed Google's commitment to Glass last month.
- Prior Google earnings coverage
Thu, Apr. 23, 4:27 PM
- Much like Facebook, Google's (NASDAQ:GOOG) Q1 sales were hurt by a strong dollar - Y/Y growth was 12% in actual dollars, and 17% in constant currency. Google did manage to partly offset forex pressure by recording $311M in hedging gains.
- Ad prices (CPCs), affected by both forex and an ongoing mix shift towards smartphone ads, fell 5% Q/Q and 7% Y/Y, after dropping 3% Y/Y in Q4. Paid clicks fell 1% Q/Q (seasonality) but rose 13% Y/Y; they were up 14% Y/Y in Q4.
- Google sites revenue (69% of total revenue) +14% Y/Y to $11.9B. Revenue from ad network sites (hurt by policy changes, and perhaps also the mobile shift) +1% to $3.58B. Other revenue (Nexus hardware, Google Play, etc.) +23% to $1.75B. Paid clicks on Google sites rose 25%, while clicks on ad network sites fell 12%.
- Google cooled its spending growth a bit: Operating expenses were 35% of revenue vs. 37% in Q4 and Q1 2014 - R&D spend totaled $2.75B, sales/marketing $2.07B, and G&A $1.64B. Traffic acquisition costs were 22% of revenue, even with Q4 and down from 23% a year ago.
- Op. margin was 33% vs. 32% a year ago. Free cash flow was $3.69B, trailing net income of $4.53B thanks in part to a 25% Y/Y increase in capex to $2.93B. Google ended Q1 with $65.4B in cash/marketable securities (much of it offshore), and $5.2B in debt.
- GOOG +1.8% AH to $557.00.
- Q1 results, PR
Thu, Apr. 23, 4:02 PM
Wed, Apr. 22, 5:35 PM
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Wed, Feb. 18, 12:15 PM
- Down AH yesterday due to the light sales guidance provided with its mixed Q4 results, Rackspace (RAX +1.4%) is now back above $50. Helping its cause: Pac Crest has upgraded to Outperform, and at least four firms have hiked their targets.
- Pac Crest cites enterprise and OpenStack momentum as reasons for upgrading: "In the second half of 2014, Rackspace won more large enterprise contracts worth at least $100,000 per month than it had in the prior five quarters combined ... management indicated that OpenStack now makes up more than 50% of its public cloud revenue, which implies OpenStack revenue is at least 15.6% of its total revenue."
- Cowen (target hiked to $75) now considers it likely Rackspace "will announce support for a mega cloud provider in 1H15," thereby boosting its long-term addressable market and lowering future capex needs (in exchange for sharing revenue). It adds sales guidance was in-line after adjusting for forex, and that EBITDA margin guidance was better than expected.
- Meanwhile, new CEO Taylor Rhodes argues the cloud infrastructure (IaaS) market's price war is calming down. "Amazon Web Services (NASDAQ:AMZN) in November, for the first time, didn’t make a price cut move ... AWS is feeling like they are the reference brand leader, that they are strong versus Google (NASDAQ:GOOG), so they don’t need to do it as much. Microsoft (NASDAQ:MSFT) is cutting price, but who knows how much share they are actually taking."
- He also reiterates Rackspace's assertion that its OpenStack/hybrid cloud offerings are differentiated in the battle for enterprise accounts. "The mainstream market has two problems: They have legacy apps that won’t go [to multi-tenant public clouds] automatically ... the second problem they have is this skills set gap ... There is a need for software and tools development."
- Q4 results, guidance/details
Thu, Jan. 29, 7:53 PM
- With the Senate weighing a bipartisan effort to let companies repatriate offshore cash for five years at a 6.5% rate, Google (NASDAQ:GOOG) CFO Patrick Pichette states on the Q4 CC the passage of such a bill would change how his company spends. He adds ~60% of Google's cash is offshore, and ~40% domestic. (CC live blogs: WSJ, BI)
- Google ended Q4 with $64.4B in cash/marketable securities, and $5.2B in debt. Speculation that dividends and/or buybacks might finally happen has grown a bit lately. Pichette says Google has nothing to announce regarding capital returns, but also insists Google does care about its stock price and reviews the matter with its board.
- Chief business officer Omid Kordestani states YouTube's mobile revenue more than doubled Y/Y. YouTube, which is trying hard to grab brand ad dollars from TV advertisers, has already disclosed mobile now accounts for ~40% of its global viewing time.
- Other CC highlights: 1) Google saw $150M worth of forex hedging gains in Q4. If not for them, forex's revenue impact would've been above $600M. 2) Pichette suggests Google would be hiring even more employees if it could find enough qualified personnel. 3) Over $900M of Google's capex went into real estate purchases.
- GOOG now +1.4% AH. Q4 results, details.
Thu, Jan. 29, 4:29 PM
- Google's (NASDAQ:GOOG) paid clicks rose 14% Y/Y in Q4, a slowdown from Q3's 17% growth and Q2's 2015. Google site paid clicks rose a healthy 25%, but ad network paid clicks fell 11%. Ad quality efforts appear to have hurt the latter, and indirect competition from Facebook might have as well.
- Cost per click (CPCs - ad prices) remained under pressure due to low smartphone ad prices, falling 3% Q/Q and Y/Y; Q3's Y/Y drop was 2%. Google site CPCs fell 8%; network CPCs rose 6%.
- Google sites revenue (69% of total revenue) +18% Y/Y to $12.43B; Network revenue +6% to $3.72B; other revenue (Nexus devices, Google Play, etc.) +19% to $1.95B. Traffic acquisition costs fell to 22% of revenue from 24%; the ending of the Firefox deal likely helped.
- Spending remains aggressive: Operating expenses rose to 37% of revenue from 32% a year earlier; R&D spend rose 45% to $2.8B, sales/marketing 25% to $2.4B; and G&A 35% to $1.6B.
- Capex totaled $3.55B (equal to nearly 25% of revenue), and headcount rose by over 2K Q/Q to 53.6K. Free cash flow was $2.81B, down from $2.98B a year ago and below net income of $4.74B.
- Forex hurt Q4 revenue by $541M. International sales made up 56% of revenue, even with a year ago.
- Shares have fallen below $498 in AH trading.
- Q4 results, PR
- Update (7:55PM): Shares are now up 1.4% AH. Google's CC commentary might be helping.
Thu, Jan. 29, 4:10 PM
Wed, Jan. 28, 5:35 PM
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Oct. 16, 2014, 5:52 PM
- "It's the time of year when we do equity refresh," CFO Patrick Pichette stated on Google's (NASDAQ:GOOG) Q3 CC, downplaying the company's heavy opex growth (especially for R&D). He insists Q3's spending growth rate was unique, and suggests rates will be lower going forward. (live blog)
- Likewise, sales chief Omid Kordestani (filling in for the departed Nikesh Arora) suggested the slowdown in paid click growth is a normal fluctuation, and that swings happen from time to time as changes are made. Is Facebook a culprit? The social networking giant's ad sales rose 67% Y/Y in Q2 to $2.68B.
- Pichette attributes much of the 20% Y/Y increase in Google sites revenue to mobile search (not surprising), and the 9% increase in ad network revenue to Google's AdMob (mobile display ad) and Ad Exchange platforms. Given the low overall growth rate, that suggests mainstay AdSense network ads - the focus of many policy changes meant to improve the user experience - were soft. Google Play and ad licensing fueled the 50% increase in Other revenue.
- Google suggests mobile ad prices are rising, but (as usual) doesn't provide details. The company does note total cost per click would've been up 1% Q/Q if not for forex.
- GOOG -2.7% AH. Q3 results, details.
Oct. 16, 2014, 4:19 PM
- Google's (NASDAQ:GOOG) paid clicks rose 17% Y/Y (and 2% Q/Q) in Q3, a marked slowdown from Q2's 25% growth. Clicks on Google sites +24% vs. +33% in Q2; clicks on ad network sites (hurt by policy changes) +2% vs. +9%.
- On the bright side, cost per click (CPC) was flat Q/Q and only down 2% Y/Y, suggesting the pressure caused by low smartphone ad prices is abating. CPC for Google sites and ad network sites both fell 4%.
- EPS was hurt by heavy spending: Opex was 37% of revenue vs. 35% in Q2 and 33% a year ago. R&D spend +46% to $2.66B; sales/marketing +28% to $2.08B; G&A +20% to $1.37B. Headcount grew by nearly 3K from the end of Q2 to 55,030.
- Google sites revenue +20% Y/Y to $11.25B; ad network revenue +9% to $3.43B. All other revenue (Nexus hardware, Google Play, etc.) +50% to $1.84B.
- Traffic acquisition costs were 23% of revenue, even with Q2 and down from 24% a year ago. International sales were 58% of revenue, even with Q2 and up from 56% a year ago.
- Free cash flow was $3.58B,+28% Y/Y but less than net income of $4.37B. Capex totaled $2.42B (15% of revenue ex-TAC).
- Q3 results, PR
Oct. 16, 2014, 4:02 PM
Oct. 15, 2014, 5:35 PM
Jul. 18, 2014, 1:26 PM
- 9 firms have hiked their Google (GOOG, GOOGL) targets after the company reported mixed Q2 numbers, a 25% Y/Y increase in paid clicks, and a smaller-than-expected 6% drop in cost per click (CPC). BGC has upgraded shares to Buy.
- "With now four quarters in a row of 20%+ Web sites revenue growth, Google’s search business appears to be benefiting from a virtuous cycle of audience growth and pricing power," gushes Canaccord ($715 PT). It sees product listing ads, Android share gains, and Google's efforts to integrate more data within search results boosting future growth.
- JPMorgan sees improving CPC trends for Google sites pointing to "more material improvements in mobile monetization, or at least that the mobile pricing gap is becoming less of a drag." The firm's 2014 revenue estimate has been hiked, but its EPS estimate has been cut following stronger-than-expected spending.
- SunTrust is a little concerned about a decline in U.S. growth to 12% and soft ad network prices (mobile is viewed as a culprit). But it's also pleased with paid click growth, and unconcerned about Nikesh Arora's pending departure. Cantor thinks the top-line numbers suggest Google "continues to gain share both in search and display."
- Meanwhile, the Telegraph reports Google is looking to bring Fiber to the U.K. The company suggested on its CC (transcript) more Fiber announcements are on tap.
- Prior Google earnings coverage.
Jul. 17, 2014, 6:18 PM
- Focus on Google's (NASDAQ:GOOG) Y/Y cost per click (NYSE:CPC) figures rather than "noisy" Q/Q figures, says departing sales chief Nikesh Arora on the CC. The Y/Y numbers show moderating declines (-6% in Q2, -9% in Q1), as Google takes steps to boost mobile ad prices and grow demand for product listing ads (PLAs).
- Arora also states Google has initiatives afoot to improve CPCs in international/emerging markets, where they tend to be well below U.S. levels (Facebook can relate). Demographics/income levels are responsible for part of the gap.
- Other CC remarks: 1) Google is working with 34 cities on Fiber requirements, and has achieved major cost reductions. More Fiber announcements will arrive later in 2014. 2) PLAs are driving 3x as much traffic as a year ago. 3) ~60% of Google's cash ($61.2B at the end of Q2) is offshore. 4) Google still thinks mobile ad CPCs will eventually exceed PC CPCs, thanks to their ability to use location data and drive local/offline commerce.
- CC live blogs: I, II
- GOOG +1.2% AH. Q1 results, details.
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