Google parent company Alphabet is set to report its second quarter earnings Monday after the bell. Wall Street expects strong ad sales growth, with little to no impact from Europe’s new privacy rules, GDPR, which took effect on May 25.
Here are the most important numbers analysts are expecting, via Thomson Reuters consensus estimates:
- Earnings per share (adjusted): $9.59
- Revenue: $32.171 billion
The European Union just slapped the company with a massive $5 billion fine for competition abuses related to its Android phone software, which will show up as a separate operating expense line on its income statement, affecting its non-adjusted earnings per share.
One metric analysts plan to pay close attention to is Google’s traffic acquisition costs, or TAC. Google’s TAC, which includes the money it pays to phone manufactures, like Apple, to use its services, like search, has been growing. Alphabet CFO Ruth Porat has said that those costs will continue to climb, but she advised last quarter that the pace of year-over-year growth of TAC as a percentage of revenue would slow beginning in Q2 (it hit 24 percent of Google’s advertising revenue last quarter). Wall Street will be looking for that proof.
Other numbers to watch are capital expenditures, which tripled year-over-year last quarter because of data center costs and Google’s $2.4 billion purchase of New York City’s Chelsea Market, as well as any big changes in its “other revenues” category, which includes its cloud business and hardware sales.
While Google’s advertising business is the main source of revenue and profits for the company, analysts will also be watching as Alphabet reports revenues and losses for its long-term “Other Bets,” like healthcare company Verily and internet service provider Fiber. Waymo, Alphabet’s self-driving car unit, plans to launch its taxi service before the end of the year, and Wall Street will be looking for information about those efforts on the earnings call.