A source says Comscore has finally released its February “US paid clicks” report for Google (GOOG), Yahoo (YHOO), et al. We have not seen the report, but our source relays the following:
Google had 515mm US paid clicks in February, which is up only 3% year over year. At first glance, this appears to be a slight–slight–improvement from the horrific January report, which was flat y/y at 532mm clicks. However, Comscore did not adjust for the Leap Year (29 days vs 28), so this likely accounted for the entire increase.* Both months show a severe slowdown from Q4:
Feb: +3% [Does not adjust for Leap Year 29 days vs 28. Therefore pro forma 0%]
Our source believes Wall Street was looking for 5%-7% growth in Google’s US paid clicks and that this report will likely cause the stock to trade down. For basic queries (versus paid clicks), Google US was up 31% and Google International was up 31%.
RBC has already weighed in on the results:
Overall deceleration from 30% in 4Q to flattish in 1Q continues to be a
concern… While its impossible to use comScore’s paid click number to
accurately predict Google revenue with any confidence, there does appear
to some co-specific self-inflicted reduction in ads, and these trends
can’t be ignored completely.
This datapoint will not have as much shock value as the Jan data, as
some investors were bracing for a negative y/y comp….our thesis on co
is unchanged, we still blv co’s int’l biz is strong but we’re cautious
on US growth relative to expectations in 08 and blv there is downside to
cons ests (cowen & ubs cut earlier this week)
Meanwhile, our source says Yahoo came in at 225mln paid clicks, which is up 5% y/y. This compares to January up 15% (vs +7% in Dec). Our source says this is a slight disappointment, as Yahoo’s click-through rate did not improve and the company saw a sequential slowdown from Jan.
We continue to believe that Google’s full-year 2008 estimates will have to come down. It is hard to see the stock rising sustainably until consensus estimates bottom and then start rising again.