Alphabet (GOOG, GOOGL) is set to report Q1 results tonight after the close with a conference call to follow at 4:30pm ET. GOOG reported Q4 results at 4:01pm.

Current consensus is looking for EPS of $7.96 on Revenue of $20.38 bln.

KEY METRICS:

• Revenue Growth- Q4 saw 18% which was a marked improvement from the prior three quarters (13.0%, 11.1%, 11.9%); Expectations are for another 18% y/y increase.
• Non-GAAP Operating Margin- Increased to 32% in Q4. Google's Core margins were up 320 bps to 47%.
• Aggregate paid Clicks- Q4 increased 22% q/q on Google websites.
• Q4 Aggregate cost-per-click- Q4 was down 5% q/q in Q4.

Q4 Recap

GOOGL reported Q4 (Dec) earnings of $8.67 per share, $0.58 better than the Capital IQ Consensus of $8.09. Revenues rose 18.5% year/year to $21.33 bln vs the $20.76 bln Capital IQ Consensus.

Aggregate paid clicks- Q4 +31%; Q3 +23%.

• Paid Clicks on Google websites- Q4 +40%; Q3 +35%.
• Paid clicks on member sites- Q4 +2%; Q3 -5%.

Aggregate cost per click- Q4 -13%; Q3 -11%.

• CPC on Google sites- Q4 -16%; Q3 -16%.
• CPC on member sites- Q4 -8%; Q3 -4%.

Revenue Segments

• Google Website revenue +20% y/y
• Google Network Member websites +7% y/y
• Google Advertising +17% y/y
• Google Other Revenues +24% y/y

• Operating Expense as % of revenue 36% compared to 37% in prior year
• Free Cash Flow- $4.31 bln compared to $2.81 bln in prior year
• TAC As a % of revenue- 21% compared to 22% in prior year.

Alphabet misses by $0.46, reports revs in-line

Reports Q1 (Mar) earnings of $7.50 per share, $0.46 worse than the Capital IQ Consensus of $7.96; revenues rose 17.4% year/year to $20.26 bln vs the $20.38 bln Capital IQ Consensus

Revenue Segments

• Google Websites +20% y/y
• Google Network Members' Websites 3%
• Advertising Revenues +16% y/y
• Google other revenues +24% y/y
• Q1 Other Bets Revenue $166 mln; Operating Loss ($802) mln
• Paid Clicks and Cost Per Clicks
  • Aggregate paid clicks- Q1 +29%;Q4 +31%; Q3 +23%.
    • Paid Clicks on Google websites- Q1 +38%; Q4 +40%; Q3 +35%.
    • Paid clicks on member sites- Q1 +2%; Q4 +2%; Q3 -5%.
  • Aggregate cost per click- Q1 -9%; Q4 -13%; Q3 -11%
    • CPC on Google sites- Q1 -12%; Q4 -16%; Q3 -16%.
• CPC on member sites- Q1 -8%; Q4 -8%; Q3 -4%.
• Q1 Free Cash Flow $5.23 bln
• Q1 Effective Tax Rate 18%

It looks like expectations are growing as margins are contracting. This is not a good scenario for a growth company. The longer this goes the more likely the old google days are over.