Alphabet (GOOGL, GOOG) is set to report Q3 earnings tonight after the close with a conference call to follow at 4:30pm ET. GOOGL reported Q2 results at 4:01pm, the company does not guide. 

Current Capital IQ consensus stands at EPS of $8.60 on Revenue of $22.03 bln.

Shares of GOOGL hit an all time high of $838.50 on Monday but we have seen some profit taking ahead of tonight's report as the stock has pulled back to $820. The company is coming of an impressive Q2 in which it was able to accelerate revenue growth to over 20% for the first time in three years.

The growth was driven by Google website revenues as strength in the mobile and YouTube segments provided a boost. The rise in mobile has also boosted the growth in partners and website TAC which will be an area to watch.

The all time high will certainly be in play, especially when one views the Forward P/E of 20.5x being reasonable for a co that is posting 20%+ revenue increases despite being a $20+ bln a quarter company, no easy feat. A miss by GOOGL should prove interesting with the $783.50 Post-Q2 results being a key level of support. A break of this will send the shares to the $760 with the 200-sm ($757.29) in play.

Key Metrics

• Revenue Growth
• Operating Margins
• Aggregate Paid Clicks-  Q3 expected to increase approx 26% y/y; Q2 +29%;-Q1 +29%;Q4 +31%; Q3 +23%.
  • Paid Clicks on Google websites- Q2 +37%;Q1 +38%; Q4 +40%; Q3 +35%.
  • Paid clicks on member sites- Q2 0%;Q1 +2%; Q4 +2%; Q3 -5%.
• Aggregate cost per click- Q3 is expected to decline approx 5% y/y; Q2 -7%; Q1 -9%; Q4 -13%; Q3 -11%
  • CPC on Google sites- Q2 -9%; Q1 -12%; Q4 -16%; Q3 -16%.
  • CPC on member sites- Q1 -8%; -8%; Q4 -8%; Q3 -4%.
  • If curious: Cost-per-click is defined as click-driven revenue divided by our total number of paid clicks and represents the average cost we charge advertisers for each engagement by users.

Q2 Recap

GOOGL reported Q2 (Jun) earnings of $8.42 per share, $0.38 better than the Capital IQ Consensus of $8.04. Revenues rose 21.3% year/year to $21.5 bln vs the $20.77 bln Capital IQ Consensus.

RESULTS

GOOGL/GOOG beats by $0.46, beats on revs  

• Reports Q3 (Sep) earnings of $9.06 per share, $0.46 better than the Capital IQ Consensus of $8.60; revenues rose 20.2% year/year to $22.45 bln vs the $22.04 bln Capital IQ Consensus.
• Non-GAAP Operating Margin 34% compared to 33% prior year
• Other Bets revenue $197 mln compared to $141 mln in prior year
  • Other Bets operating loss ($865) mln compared ot ($980)mln in prior year
• Cost of revenues as %- 39% compared to 38% in prior year
• Google Website Revenue Growth 23%
• Google Network Members Websites 1%
• Google Other Revenues 39%
• Google segment Revenues 20%
• TAC as a % of revenue 21% compared to 21% in the prior year
• Aggregate Paid Clicks-
  • Q3 +33%, expected to increase approx 26% y/y; Q2 +29%;-Q1 +29%;Q4 +31%; Q3 +23%.
  • Paid Clicks on Google websites- Q3 +42%; Q2 +37%;Q1 +38%; Q4 +40%; Q3 +35%.
  • Paid clicks on member sites- Q3 +1%; Q2 0%;Q1 +2%; Q4 +2%; Q3 -5%.
• Aggregate cost per click-
  • Q3 -11%, expected to decline approx 5% y/y; Q2 -7%; Q1 -9%; Q4 -13%; Q3 -11%
  • CPC on Google sites- Q3 -13%; Q2 -9%; Q1 -12%; Q4 -16%; Q3 -16%.
  • CPC on member sites- Q3 -14%; Q1 -8%; -8%; Q4 -8%; Q3 -4%.