Active Stock: Google (NASDAQ GOOG) Q3 Earnings Preview

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Google Inc (NASDAQ GOOG) is scheduled to release and discuss its third-quarter financial result on Thursday, October 16 at 1:30 P.M. Pacific Time. Analysts at Bernstein Research believed that investors are still primarily focused on the company’s revenue growth sustainability, the trajectory of its operating expenses, margin and capex.

According to Bernstein Research analysts Carlos Kijner and Peter Paskhaver, their third-quarter revenue and EBITDA estimates for Google Inc (NASDAQ GOOG) are below consensus. The analysts estimated that Google Inc (NASDAQ GOOG) will report $16.53 billion revenue, below the $16.60 billion consensus estimate. They expect the search engine giant to deliver non-GAAP earnings of $6.63 per share compared with the consensus estimate of $6.55 per share.

Kijner and Paskhaver explained that a large portion of their estimate (below consensus) was “due to F/X headwinds.” They added, “ We believe the key metrics to watch are the evolution of Google Sites growth, the potential re-acceleration of Network revenues, sequential headcount additions and any indications of a normalization of capex intensity.”

Google Inc (NASDAQ GOOG) News: GOOG Q3

The analysts expected Google Sites’ revenue will grow 22.3% year-over-year on an FX neutral basis. Kijner and Paskhaver believed Google Sites would benefit from a 19.8% and 39% increase in search advertising revenue, respectively (YoY FX-neutral).

On the other hand, Kijner and Paskhaver expected Google Network’s revenue to re-accelerate ( around 9%) in the third-quarter. They expected most expenses (ex-TAC) are fixed or semi-fixed. According to them, “The incremental gross profits associated with the re-acceleration of Google Network will have a disproportionate impact on margins.”

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Google Inc Financial News (NASDAQ GOOG)

The analysts believed that the other revenues of Google Inc (NASDAQ GOOG) are poised to grow at high double-digit rates over the next few years. According to them, Google Play will serve as a strong growth driver. Google’s other revenues are expected to increase 47% YoY in the third-quarter.

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