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3 Key Estimates for Google's Q4 Earnings Report

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Shares of Google parent Alphabet Inc. (GOOGL - Free Report) opened nearly 0.5% higher on Wednesday as investors gear up for the company’s fourth-quarter earnings announcement tomorrow afternoon. Google is often considered a bellwether for the entire technology sector, so investors will definitely want to pay close attention to this upcoming report.

A shift to mobile computing once threatened Google’s traditional search business, management has successfully adapted to changing consumer trends by expanding its operations into nearly every corner of the modern tech world.

Today, Google and the other subsidiaries under the Alphabet umbrella sit on the cusp of dominance in several booming industries, including cloud computing, mobile payments, ecommerce, and artificial intelligence. Of course, search is still the company’s bread and butter, but there’s plenty more to be excited about if you’re an Alphabet investor right now.

Heading into Alphabet’s report date, our current consensus estimates are calling for the company to post adjusted earnings of $10.12 per share and revenues of $25.67 billion. These results would represent year-over-year growth of 8% and 30%, respectively.

Key Report Items

But of course, earnings and revenue are just two of the many things investors will be looking at when Alphabet reports on Thursday. In fact, it is possible that the company’s post-earnings momentum is inspired by its performance in key business segments.

To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

Based on our current consensus estimates, we expect Google’s advertising revenues to come in at $26.935 billion for the quarter, which would represent growth of about 20.3% from the year-ago period. Last quarter, advertising revenues grew about 21.4% to touch $24.065 billion.

But Alphabet’s most exciting growth catalyst is its “Google other revenues” category. This unit includes revenues from the company’s Google Play Store, as well as its Google Cloud offerings and hardware initiatives.

Our consensus estimate file is calling for Google other revenues to hit $4.613 billion, up about 35.6% from the year-ago quarter. In the previous quarter, Google other revenues expanded more than 39.9% to reach $3.405 billion. If Alphabet can post a positive surprise in this category, it will likely be because of strong holiday sales from things like Google Home and the Pixel.

Finally, investors should also expect to see impressive growth in Alphabet’s mysterious “Other Bets” unit. The company uses this segment to lump together its smaller projects, and for the most part, these projects don’t generate much revenue.

But some of the Other Bets subsidiaries—including Google Fiber, Nest, and Verily—are adding to Alphabet’s top line. According to our consensus estimates, Other Bets revenues are expected to come in at $362 million, which would represent growth of 38.2% year-over-year. Last quarter, Other Bets revenues soared 53.3% to touch $302 million.

Make sure to check back here for our full analysis of Alphabet’s actual results tomorrow!

Want more analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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