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Advertising, Other Bets, & More Important Q3 Google Estimates

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Shares of Google parent Alphabet Inc. (GOOGL - Free Report) have slipped over 11% during the last three months. But things could turn around for the search engine and advertising giant when it reports its Q3 financial results Thursday. So, let’s see what to expect from Alphabet’s top and bottom lines and some of its key business units.

Overview

Google is coming off a quarter that saw its total revenues surge 26% to reach $32.65 billion.The firm also claims approximately 37% of the total U.S. digital advertising market, according to eMarketer. This crushes second place Facebook’s 20%.

Investors should also note that Google recently launched its next-generation Pixel 3 and the Pixel 3XL smartphones that hope to better compete against Apple’s (AAPL - Free Report) latest iPhones. The tech powerhouse also rolled out its new Google Home Hub to fight Amazon (AMZN - Free Report) and others in the crowded home assistant market. These, however, won’t impact the firm’s Q3 results.

 

 

Our current Zacks Consensus Estimate is calling for Google’s Q3 revenues to jump by roughly 22.4% to reach $27.25 billion. Investors should note that our revenue estimate excludes Google Network Members revenues, which hit $4.825 billion in Q2. Meanwhile, Alphabet’s adjusted quarterly earnings are projected to pop by 10.1% to hit $10.54 per share.

Yet, these top and bottom line estimates might impact GOOGL stock less, especially in the near term, than its individual business segment performance. Luckily, we can turn to our exclusive non-financial metrics consensus estimate file to help prepare for this.

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.

Google Advertising Revenues

Google is still an advertising business at its core that makes a majority of its money from its search-related business. Last quarter, the firm’s advertising revenues surged roughly 24% from $22.672 billion to reach $28.087 billion.

Looking ahead, Google’s main ad unit its expected to see its Q3 revenues reach $29.140 billion, based on our NFM estimates. This would mark just over a 21% climb from the year-ago period when the firm posted ad revenues of $24.065 billion.

Google Other Revenues

Moving on, Alphabet’s “Google other revenues” is made up of the Google Play Store, Google’s Cloud offerings, and its hardware business. Other revenues jumped by $1.184 billion, or over 36% to touch $4.425 billion during the second quarter.

Google other revenues, which includes its Pixel products, are projected to jump nearly 41% from $3.405 billion in the year-ago period to reach $4.796 billion in Q3.

Other Bets

Lastly, we need to know what to expect from Alphabet’s Other Bets unit. This business segment jumped roughly 50% from $97 million in the second quarter of 2017 to hit $145 million. The growth was primarily driven by Fiber and Verily.

Other bets, which also features Google’s self-driving car segment Waymo, is expected to see its revenues hit $156.78 million in Q3. Investors should note that Google removed its Nest smart-home business from its other bets unit earlier this year.

Make sure to check back here for our full analysis of Alphabet’s actual results after the closing bell on Thursday.

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