Google (GOOG) reports Q2 results today after the close. We’ll be providing live analysis of the release and conference call here. Look forward to seeing you then!
There is a lot more optimism about Google this quarter than last quarter, as Comscore’s April click report was encouraging and anecdotal spending and traffic reports have been robust. That said, the Street is looking for a significant improvement in Google’s rate of revenue deceleration, and our analysis suggests that there is some downside risk to this.
In the past several quarters, Google’s revenue growth rate has decelerated rapidly, which has led to multiple compression. Wall Street expects this deceleration to slow significantly in Q2:
Year Over Year Net Revenue Growth
Q207 Y/Y: 63%
Q307 Y/Y: 62%
Q407 Y/Y: 52%
Q108 Y/Y: 46%
Q208 E: 43%
Our modelling suggests that Google will meet the consensus revenue estimate only if the US trends significantly improved in Q2. A continuation of the prior trends, meanwhile, would lead to a revenue miss. This suggest to us that there is more downside risk than upside risk to the consensus estimate.
As usual, the EPS consensus is easier: Unless Google has continued to increase spending in the face of a sharp revenue slowdown, the company should easily beat EPS consensus.
- Gross Revenue: $5.4 billion consensus, up 40%
- Net Revenue: $3.88 billion consensus, up 44% (modest deceleration from 46% in Q1)
- EPS: $4.75 (Should be plenty of upside here, unless company really blows it)
SAI Spreadsheet: Google Financial Analysis
LIVE ANALYSIS: Google Q2 Earnings, After The Close
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