Examining Alphabet's Q3 Earnings: Key Metrics vs. Estimates

In the quarter ending in September 2024, Alphabet (GOOGL) reported impressive financial results. The company's revenue reached $74.55 billion, marking a significant increase of 16.4% year-over-year. Earnings per share (EPS) also saw growth, coming in at $2.12 compared to $1.55 for the equivalent quarter last year.

These figures exceeded Wall Street's expectations. The reported revenue was a surprise of +2.34% above the Zacks Consensus Estimate of $72.85 billion. In terms of EPS, the consensus estimate stood at $1.83, leading to an EPS surprise of +15.85%.

While investors often focus on the headline numbers such as revenue and earnings, several key metrics provide deeper insights into Alphabet's underlying performance. These metrics play an important role in influencing both the top and bottom lines and help investors anticipate future price movements for the stock.

Key Performance Metrics

Here’s a closer look at some of the critical metrics for Alphabet for the recent quarter, comparing them with Wall Street’s estimates and last year's figures:

• Total Traffic Acquisition Costs (TAC): Reported at $13.72 billion, surpassing the average estimate of $13.41 billion from 13 analysts.
• Headcount: Alphabet’s number of employees stood at 181,269, slightly above the average estimate of 180,974 from four analysts.
• Revenues from EMEA: Achieved $25.47 billion, exceeding the three-analyst average estimate of $24.42 billion, reflecting a year-over-year change of +12.4%.
• Revenues from the United States: Reached $43.14 billion, significantly above the estimate of $40.21 billion from three analysts and indicating an +18.7% year-over-year growth.
• Revenues from Other Americas: Accounted for $5.09 billion, falling short of the $7.45 billion estimated by three analysts, yet showing a +11.9% increase from the previous year.
• Revenues from APAC: Reported at $14.55 billion, exceeding the three-analyst estimate of $14.06 billion, with a +10.8% year-over-year increase.
• Revenues from Google Properties: Totaled $58.31 billion, slightly above the 12-analyst average estimate of $57.74 billion, reflecting a +12.2% rise from the year-ago period.
• Revenues from Google Cloud: Came in at $11.35 billion, beating the $10.91 billion average estimate by 11 analysts, with an impressive +35% growth year over year.
• Revenues from YouTube Ads: Reported at $8.92 billion, surpassing the $8.86 billion estimate from 11 analysts and indicating a +12.2% increase compared to last year.
• Revenues from Google Advertising: Totaled $65.85 billion, higher than the $65.22 billion estimated by 11 analysts, representing a year-over-year growth of +10.4%.
• Revenues from Google Search & Other: Reported at $49.39 billion, exceeding the 11-analyst average estimate of $48.84 billion, reflecting a +12.2% change year-over-year.
• Revenues from Google Network: Achieved $7.55 billion, slightly above the $7.43 billion estimate, although this represents a -1.6% decline from the previous year.

In summary, Alphabet’s strong quarterly performance is a combination of exceeding expectations on several key metrics and showing significant year-over-year growth. Overall, executives and investors alike will take these insights into account as they gauge the company's future potential.

Market Performance

Following the earnings announcement, shares of Alphabet saw a modest rise of +0.5% over the past month. This is compared to a +1.7% change for the Zacks S&P 500 composite. Currently, Alphabet holds a Zacks Rank #2 (Buy), suggesting it could outperform the broader market in the near term.

Alphabet, Earnings, Metrics