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Parsing Alphabet’s 4Q17 Results

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Parsing Alphabet’s 4Q17 Results PART 1 OF 7

How Alphabet’s 4Q17 Compared with Expectations

Revenue grew 24% compared to 22%

Alphabet (GOOGL), the parent company of Google, reported 4Q17 earnings results that grew from the year-ago period. But the results were mixed compared to consensus estimates.

The company posted revenue of $32.3 billion, representing a growth of 24% YoY (year-over-year). Its fourth-quarter revenue continued to rise, increasing 24% YoY in 4Q17 compared to 22% YoY in 4Q16 and 18% YoY in 4Q15.

Alphabet’s 4Q17 revenue topped expectations. Wall Street was expecting revenue of $31.9 billion for the quarter.

How Alphabet’s 4Q17 Compared with Expectations

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EPS missed the consensus estimate

Looking at the bottom line, Alphabet posted adjusted EPS (earnings per share) of $9.70, an improvement over $9.36 in the year-ago quarter. However, its EPS was below analysts’ consensus estimate of $9.98.

Including the impact of the recent changes to the US tax law, Alphabet posted EPS of -$4.35.

While Alphabet has typically exceeded fourth-quarter revenue expectations, the same cannot be said of its earnings. Including the latest quarter, Alphabet has missed fourth-quarter EPS expectations in three of the last four years.

Comparing Alphabet with other big Internet names

Facebook (FB) posted EPS of $1.44 in 4Q17 after the impact of the recent tax reforms. Stripping out the tax impact, it posted adjusted EPS of $2.21. Amazon (AMZN) posted EPS of $3.75 in 4Q17 after the tax impact. eBay (EBAY) posted EPS of -$2.51 after the tax impact, and Netflix (NFLX) posted EPS of $0.41.

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