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.
Jul. 17, 2014, 4:27 PM
- In tandem with its Q2 report, Google (NASDAQ:GOOG) announces long-time sales chief Nikesh Arora (well-respected in the industry) is leaving to become SoftBank's (OTCPK:SFTBF) vice chairman and Internet/Media chief.
- Google's paid clicks (boosted by mobile and product listing ads) rose 2% Q/Q and 25% Y/Y in Q2, after growing 25% Y/Y in Q1. Paid clicks on Google sites rose 6% Q/Q and 33% Y/Y, while those on ad networks were down 5% Q/Q and up 9% Y/Y.
- Cost per click (hurt by low smartphone ad prices) was flat Q/Q and down 6% Y/Y. The Y/Y drop was narrower than Q1's 9%. CPC was down 2% Q/Q and 7% Y/Y on Google sites, and up 3% Q/Q and down 13% Y/Y on ad networks.
- Google sites revenue (69% of total) +23% Y/Y vs. +21% in Q1. Network revenue (21% of total) +7% Y/Y vs. +4%. Other revenue (10% of total, includes hardware and Google Play) +53% vs. +48%.
- Traffic acquisition costs were 23% of revenue, even with Q1 and down from 25% a year ago. Opex was 35% of revenue, even with Q1 and up from 34% a year ago.
- Free cash flow was $2.98B, below net income of $4.18B. Capex was a hefty $2.65B.
- Google ended Q2 with $61.2B in cash, up $1.8B Q/Q.
- GOOG +2% AH. Q2 results, PR.
Jul. 17, 2014, 4:12 PM
Jul. 16, 2014, 5:35 PM
Apr. 16, 2014, 6:21 PM
- Going forward, Google (GOOG) will break out its paid click and cost per click data in more detail, CFO Patrick Pichette states on the CC. Numbers for Google's reporting segments (sites, ad network, etc.) will be given in addition to a company-wide figure. (CC live blog)
- The remarks come after Google reported disappointing Q1 paid click growth (-1% Q/Q and +26% Y/Y). The numbers might fuel questions about the impact mobile apps (they account for 86% of U.S. smartphone activity, per Flurry) are having on search activity. When indirectly asked about the issue, sales chief Nikesh Arora only said Google is trying to succeed in both realms.
- Pichette states EPS was hurt by one-time legal and M&A expenses, and that Google's expenses would've been in-line with its targets otherwise.
- Separately, re/code reports Marissa Mayer is intent on convincing Apple to abandon Google as its default iOS search provider in favor of Yahoo (YHOO). Google's dominant mindshare, together with Apple's Maps experience, might make Cupertino think twice.
- GOOG now -2.8% AH. Q1 results, details.
Apr. 16, 2014, 4:15 PM
- After falling 2% Q/Q in Q4 and 8% in Q3 thanks to mobile softness, Google's (GOOG) cost per click (ad prices) was flat Q/Q in Q1. On a Y/Y basis, it fell 9%.
- Paid clicks (boosted by mobile and product listing ads) grew 26% Y/Y, a slower clip than Q4's 31% but even with Q3. Traffic acquisition costs fell to 23% of revenue from 24% in Q4 and 25% a year ago.
- Google sites revenue (68% of total) +21% Y/Y vs. +22% in Q4. Ad network revenue (22% of total, pressured by policy changes) +4% vs. +3%. Other revenue (10% of total, includes Nexus hardware and search appliances) grew 48%, down from Q4's 99%.
- Google spent aggressively: Opex rose to 35% of revenue from 33% in Q4 and 31% a year ago. Capex was $2.35B (15% of revenue), up from $2.26B in Q4. Free cash flow was $2.05B, well below net income of $4.3B. Headcount (exc. Motorola) rose to 46.2K from 43.8K at the end of Q4.
- Google had $59.4B in cash at the end of Q4, +$700M Q/Q. Its Q1 tax rate was just 18%.
- Q1 results, PR
Apr. 16, 2014, 4:02 PM
Alphabet Inc through its subsidiary Google Inc is engaged in improving the ways people connect with information & products including Search, Android, YouTube, Apps, Maps & Ads. It also produces internet-connected home devices & provides internet services.
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