Alphabet Inc (GOOGL) Information Technology – Internet Software & Services | Reports January 26, After Market Closes

Key Takeaways

Google’s parent company, Alphabet, is scheduled to report fourth quarter earnings tomorrow afternoon. The Estimize community expects Google to deliver earnings of $9.76 per share, about 12% higher than the same period last year. That estimate is unchanged in the past 3 months, despites a slew of new releases and initiatives. Revenue for the period is forecasted to climb 20% to $20.65 billion, ex-TAC, marking 8 consecutive quarters of double digit growth. 

During the quarter the company rolled out three new products; DayDream, the Pixel Smartphone and Google Home. Outside of the core business, investors will be keen to know whether these items sold well during the holiday season. The Pixel and Google Home are up against tough competition. Apple’s dominance in the phone business makes it difficult for Google to carve out a foothold in the space, while Amazon’s first mover advantage with Alexa puts it one step ahead of the Google Home. All of these products are integral to Google’s grander plan of releasing a line of products that use its native Google Assistant software.

Let’s not forget about Google’s core business; advertising. In the third quarter, core advertising revenue grew 18% to $19.82 billion, including traffic acquisition costs, and making up nearly 90% of total revenue for the quarter. A large portion of the increase came from general improvements in mobile and search but also a huge upswing in the Youtube platform. These ads typically cost more than a typical Google one and provide a new layer of support to the top line.