Thursday afternoon marks the end of an era.
When new Google parent company Alphabet reports Q3 earnings after markets close, it will be the last time that it does so without separating the core business from subsidiaries like Footpath Labs, Nest, and Google X.
Because Alphabet didn’t officially exist until October, it won’t report its first segmented earnings until January.
Analysts are expecting revenue of $US18.53 billion and earnings of $US7.21 per share, up from $US17.7 billion and $US6.99 respectively last quarter.
This will be the first time that new Google CEO Sundar Pichai will speak on the call, and analysts will likely grill him about how he plans to steer the company.
Important numbers to pay attention to will be, as always, cost per click (how much Google can charge for its ads) and paid clicks (how many times people click those ads). Specifically, investors want to see Google narrowing the gap between what it can charge for desktop ad clicks versus mobile ad clicks.
Last quarter, CFO Ruth Porat said that mobile CPC was up while desktop CPC stayed stable.
New growth engines
Google has released a flurry of new ad products this quarter, including shoppable ads on YouTube, new mobile ad tools, search ads in Google Play. Although Google doesn’t break out Play revenues, the app store makes up most of its “other revenues” category, and the introduction of these ads will likely give a healthy boost to the $US1.7 billion it pulled in last quarter.
We also expect to hear a lot about YouTube. Yesterday, Google introduced YouTube Red, a new subscription service that costs $US9.99 per month on Android and desktop and $US12.99 for iOS. Analysts at Nomura estimate the new service will have an incremental annual revenue opportunity of ~$US250 million, and we expect to hear more questions about the service on the call.
Business Insider will be covering the report live after markets close — follow along!
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