What to Expect From Google’s Q3 Earnings

Alphabet (NASDAQ: GOOG), the holding company that evolved from Google to oversee its wider-reaching projects in 2015, is set to announce its Q3 earnings in the coming days. The company, despite still boasting Google as its biggest part, has numerous divisions spanning multiple industries. 

Up over 60% year-to-date, the stock price has been steadily rising for the entirety of 2021. Investors will hope the upcoming earnings report will see a continuation of this positive trend, where the company hit an all-time high of $2,936.41 per share in September.

When is Google’s earnings date?

Google reports earnings for the third quarter of 2021 on Tuesday, October 26 at 1:30 PM Pacific Time (4:30 PM Eastern Time).

How can I listen to Google’s earnings call?

Google’s earnings call will be webcast live on the companies own YouTube page. You can access the call here. A full replay of the webcast will also remain available afterward on the same page. To access the call transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Alphabet’s investor relation page.

What to expect from Google’s earnings

Wall Street expects the company to post earnings per share (EPS) of $23.47 on revenue of $63.45 billion. This would see growth on the year-ago quarter of 16.4% and 37.4% respectively.

Alphabet investors will have a whole host of things to listen out for on the call, but some of the most important issues will include:

1. How much advertising revenue the company has received following a poor year in 2020 due to the global pandemic. Q2 of 2020 saw Google post its first revenue declines in its 26-year history. Media spending was tightly reigned in as companies scrambled to try and navigate the COVID-19 crisis. Q2 of this year saw a very different story, as Google’s ad revenue rebounded massively with advertisers trying their best to entice customers back as the world began to reopen. Investors will be hoping this revenue boost will continue as international markets continue to recover.

2. Google’s cloud services remain unprofitable, but its Q2 earnings showed that the company had cut the services operational losses by more than half. This improvement, from $1.4 billion in the year-earlier quarter to $591 million, is certainly welcome but it still falls short of being in any way profitable. The cloud platform has also cut its revenue take on its marketplace in an attempt to compete with other leading platforms such as Microsoft and Amazon. This earnings report will be the first following these cuts so anticipation is high to see if the strategy has proven profitable.

3. Investors will be eager to see if any major revenue boost is expected to be provided by the release of Google’s newest smartphone line-up. The updated Pixel range was announced to the world in a live-streamed event last Tuesday and Google will be hopeful that their flagship offerings will increase their meager market share. However, the launch was marred by the failure of the companies preorder website immediately following the launch. After the very public outage of Facebook’s servers earlier this month, a site failure of this magnitude was the last thing Google needed. It’s an incredibly bad look for a company with a market cap of $1.9 trillion, and investors will be eager to hear how the company plans to respond.

4. Google faced some other notable issues this year also. Similar to Facebook and Amazon, Google is currently appealing a $5 billion fine from the European Union for anti-competitive practices. The search giant was chastised for using its Android phone software to impede the growth of other search providers and app producers. CEO Sundar Pichai argues that “Android has created more choices, not less,” yet the case still rages on and could potentially affect Google’s practices for years to come.

Alphabet is likely to continue to grow for the foreseeable future, but the antitrust challenges the company faces can’t simply be ignored. Fines and restrictions are both certainly on the cards as Alphabet continues to battle litigation on multiple fronts. Wise investors will take in the earnings call this Tuesday with all of this held clearly in mind. 

Alphabet is certainly still an attractive investment. The impressive growth of YouTube, and its TikTok rival YouTube Shorts, are causes for excitement. This, combined with the sheer dominance of the search engine market, will keep investors very much interested.
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