Google-parent company Alphabet will report its third quarter earnings after markets close on Thursday. Wall Street is expecting strong sales growth and will be paying close attention to the company’s traffic acquisition costs and capital expenditures.
Here are the most important numbers analysts are expecting:
- Earnings per share $10.42 expected by a Refinitiv consensus estimate
- Revenue: $34.04 billion expected by a Refinitiv consensus estimate
Investors will also be eager for updates on Google’s rising traffic acquisition costs (TAC), which have been squeezing the company’s advertising margins. Google’s TAC includes the money it pays to manufacturers, like Apple, to default to its services, like search. Goldman Sachs estimated that Google will pay Apple $9 billion this year to be the built-in search engine on Safari, for example.
In Q2, Google’s TAC as a percentage of revenue decreased slightly between quarters, and Wall Street will hope to see that trend continue.
Investors will also have a close eye on Google’s “other revenues” category, which includes its cloud business, app store revenue, and hardware sales. While Google’s advertising business accounts for the lion’s share of its revenue — about 83 percent last quarter — it has positioned its cloud offerings as one of its big future money-makers. For now, its market share lags behind both Amazon and Microsoft.
As for hardware, Google just announced a slew of new devices, including a refreshed Pixel 3 smartphone, in early October.
As Google’s cloud business grows, so have its capital expenditures. They nearly doubled year-over-year last quarter, which chief financial officer Ruth Porat attributed to data center build out related to its cloud business.
It has been a rocky quarter for the company in other ways. It has faced intense criticism both internally and externally after The Intercept leaked its plans to create a censored search app in China. It also raised hackles in Senate after it reportedly waited several months before disclosing a software bug that gave developers access to the private profile data of Google+ users. The New York Times published a lengthy report Thursday that said Google shielded some of its top executives from sexual misconduct accusations with massive payouts.
This story is developing.
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