Earnings Reports

Google Ad

The week of the FANG, internet monsters Alphabet $GOOGL, formerly known as Google starts off on Monday, then Facebook $FB on Wednesday and Amazon.com $AMZN Thursday. With the Nasdaq on a tear, Friday saw it's first down day in 10 sessions, $GOOGL second-quarter earnings report is being watched eagerly.

Consensus Estimates

Gross revenue of $25.6 billion and net revenue of $20.9 billion these will be both up 19% from the year-ago quarter. Adjusted earnings are seen up 18% to $8.25 a share.

European Commission Fine

The huge fine that the European Commission levied on Alphabet of EUR 2.42 billion ($2.74 billion) fine will be booked in the quarter.

Be explanation this statement was posted by Amie Thuener, Chief Accountant

Here’s how we expect to account for the fine in our Q2 results:

  • We will report a separate operating expense line for the $2.74 billion charge on the income statement.
  • The fine is not tax deductible.
  • Therefore, the charge will reduce our GAAP net income and GAAP EPS by the full amount.

As a reminder, beginning with the first quarter of 2017, we no longer provide non-GAAP results excluding stock-based compensation expense. 

It is important to be aware that this may not be the end of the EU action there remains the chance of more antitrust fines regarding AdWords or Android.

YouTube TV

Revenue and updates on YouTube will be of interest given the success of its TV offering in April in five cities which has expanded into 10 more. It is $GOOGL so it has not been without controversy, ads appeared alongside inappropriate content, which saw a promised revolt from advertisers. We look to see how the company has addressed this issue.

Alphabet saw 44% year-over-year growth in paid clicks last quarter. Now with You Tube TV there is even greater advertising potential with more eyes on Google content.

How pervasive are these internet monsters  in our lives?  A report from Research firm Comscore ranking online hits on mobile devices and computers gives us an idea.

Unique visitors in June via Comscore

  1. Google 241 million
  2. Facebook 204 million
  3. Yahoo! 186 million
  4. Microsoft 183 million 
  5. Amazon 180 million 

Online advertising Industry Revenue Share via emarketer 

Of a forecast $83 billion revenue in 2017 the market share i expected as 40% Google and 21% Facebook.

What about Alphabet Problem Areas?

Investors don't like surprises, though despite the massive EU fine the company has largely brushed it off. What of $GOOGL's experiments that are costly or just not working, we all remember Google Glass.This segment showed a loss of $855 million in the first quarter, wider than $744 million year on year.

We look for forecasts on:

  • Fiber
  • Nest
  • Waymo 

What Analysts Think

KeyBanc Capital Markets analyst Andy Hargreaves

  • Client Research Note Published July 19
  • Price target 1,100.

Expect Q217 results at least in line with consensus estimates, with continued contributions from YouTube and growing impact from Maps.

"This should support a longer-term growth outlook that remains extremely healthy and supports upside to the current valuation.," 

MKM Partners analyst Rob Sanderson 

  • Client Research Note Published May 7, 2017
  • Reiterates Buy ratings on GOOGL and AMZN, Amazon target to $1,095 from $995 raises Alphabet to $1,170 from $1,000.

Raised estimate for 2017 revenue by $600 million to $107.4 billion in sales, 

“Despite very large numbers, tough comps and controversy surrounding an ad boycott, Google Websites still grew an impressive 21.5% y/y."

On current estimates which Bulls are likely to be taking higher on the upside surprise, GOOGL was trading at 20x 2018 earnings on a GAAP basis and 11x 2018 EBITDA (ex-cash), about inline with large cap media on both metrics. Core Google (excluding losses at Other Bets) was trading at 17x 2018, below large cap media.

Alphabet Inc Class A Stock

NASDAQ: GOOGL - Jul 21 Close 993.84USD +1.65 (+0.17%) GOOGL is near 25% tin 2017. 

52 Week Range  743.59 - 1,008.61
Market Cap 679.104B
Beta 0.92
PE Ratio (TTM) 33.58
EPS (TTM) 29.59
Earnings Date Jul 24, 2017

 

Log in to comment
Discuss this article in the forums (10 replies).