Alphabet Stock Positive Prior to Release of Q1 Earnings

Google-parent company Alphabet Inc is scheduled to release its first quarter earnings results for the year later during Monday’s trading session. Shares of the company were bullish a week prior to the release of the earnings results. Aside from its earnings numbers, the company also is expected to make a number of changes on the way it delivers its quarterly earnings.

Earlier this month, Alphabet announced that it expects a decrease in their revenue from their “Other Bets” category as well as an added volatility from its other income and expenses. Meanwhile, the company is also set to provide a new way to measure the success of its advertisements on third-party sites.

Back in February, Google announced its plans to push its stand-alone smart home unit, Nest back to the company’s hardware team due to the overlapping of their work. The Nest project is known to be a part of Alphabet “Other Bets” which generates a considerable amount of revenue for the company including their cloud business as well as hardware sales and revenue from the Google Play store.

Due to the changes made in the Nest project, the revenue from the project will now be recorded and posted under Google’s other revenues. This will result to a bigger revenue from Alphabet’s other revenues category and a decline on its revenue from “Other Bets”.

Other changes the company intends to make is a result of a new rule called Accounting Standards Update 2016-01 where unrealized gains and losses must now be regarded on its income statement.

Alphabet is also set to change the metrics for its monetization for Google’s Network properties from clicks to impressions. The company is known for delivering its revenue from advertising in two parts which includes Google properties as well as Google Network Members properties. The changes would result into the company switching the metric of the Network properties to the percentage change in impressions and cost per impression which is how ads are usually viewed and as well as how much it can charge for the said views.

Earnings Expectations

During the previous quarter, Alphabet shares lost around 5% following a weak and disappointing fourth quarter earnings report from the company. While Google showed a strong revenue growth during the fourth quarter posting $32.32 billion beating most analyst estimates of $31.86 billion, its earnings of $9.70 per share were below consensus estimates of $9.98 per share.

Google’s revenue from its advertising business drove the most growth for the company during the previous quarter with the sector recording around $27.27 billion in revenue while its enterprise business and hardware sales posted $4.69 billion in revenue.

For Alphabet’s first quarter, revenue is expected to rise by 22.5% while their earnings are set to decline by 7% during the first quarter. Despite this, the stock has been projected to grow by as much as 22% since the beginning of the year due to a mostly positive full-year earnings estimates for the company for the rest of the year. The full-year earnings outlook of the company are also mostly higher compared to other technology stocks.

See also: Alphabet Names New CEO

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