Peter Kafka

Recent Posts by Peter Kafka

How to Read Google’s Q1 Results

Google is coming out with its Q1 results in a few minutes. Google’s numbers used to be fairly straightforward, but recently they got a bit more complex; last quarter we saw a bunch of news outlets, and presumably other people, get a bit flummoxed when the results first came out.

So maybe these hints will help. Warning! I’m just a typer, offering free advice. So if anything goes wrong here, I can’t offer you a refund. That said:

  • Google will report a “consolidated revenue” number, likely something in the $14 billion range. Ignore that number. That’s because Google’s total revenue now includes results from its Motorola unit, which Wall Street doesn’t really care about. This also goes for year-over-year comparisons for consolidated revenue — Google didn’t own Motorola a year ago, so noting that it grew 35 percent year over year, or whatever, isn’t relevant.
  • Do pay attention to what Google calls “Google revenues.” That’s the “real” Google, which various analysts also refer to as “core Google” — i.e., that’s Google’s ad business, plus a bit of money from stuff like Google Play sales and Nexus tablets.
  • But wait! You’re not done yet. Now you have to subtract the amount of money Google spent to get that ad money — its TAC, or traffic acquisition costs.
  • Now you have Google’s net revenue — in other words, its “real” revenue. At least in Wall Street’s eyes. It will likely be in the $11 billion range.
  • If you care about Wall Street estimates, you can also pay attention to operating income for “core Google,” as well as Google’s “non-GAAP” earnings per share for the whole company. Those aren’t Google’s “real” earnings, but they’re the ones the Street cares about.

Got it? Okay.

Here’s what J.P. Morgan’s Doug Anmuth is looking for, along with some consensus estimates, via Bloomberg. I’ll be back online to start sorting through the numbers at 4 pm ET; see you then:

JP Morgan Q1


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik