What Experts Are Saying About Google’s Q1 Performance

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Though Google posted a revenue of $ 17.3 billion in Q1 2015, a 12 percent year-over-year increase, many analysts agree that the search giant missed its target.

Patrick Pichette, Google’s CFO, commented on his company’s performance in a press release:

Google’s first quarter revenue was $ 17.3 billion, up 12 percent year on year. Excluding the net impact of foreign currency headwinds, revenue grew a healthy 17 percent year on year. We continue to see great momentum in our mobile advertising business and opportunities with brand advertisers.

Despite the lesser-than-expected result of Q1, many analysts are still confident in Google’s long-term health. Here’s a look around the web at what analysts and experts are saying about Google.

RBC Capital Markets’ analyst Mark Mahaney:

Our point of view has been that Mr. Market has wanted three things from Google — Consistent Revenue Growth, Margin Stabilization, and Cash Back. In Q1, Mr. Market got two out of three. … That’s why we are incrementally positive. Consistent growth has been a hallmark of Google for quite some time, but margin stabilization was a very welcome surprise. Google is positioned well to capitalize on many of the biggest trends in Internet — the Mobile/Multi-Screen shift, the migration of TV ad budgets Online, the growing importance of Local Internet, wearable devices, the Internet of Things, etc.

Sanford C. Bernstein analyst Carlos Kirjner:

We thought the results were mixed, but on balance positive. We believe search advertising revenues grew in the high teens, although they showed some signs of deceleration. Capex intensity declined sequentially, but is still elevated versus the historical norm. On the positive side, we saw headcount additions in the first quarter at a significantly lower level than in the first quarter of 2014, with the employee base growing 20 percent year over year, in line with FX-neutral gross profit growth.

3Q Digital account director Bob Sturges:

The major device trend that we’ve noted for several quarters continues: Google search is seeing significant CPC growth in mobile and tablet. Advertisers are more likely to want to compete, users are increasingly using their mobile devices for what was once traditionally the realm of desktop applications, and improving conversion rates enable more aggressive bids.

On the mobile side, 3Q clients saw a whopping 44 percent increase in conversion rate, which more than made up for the increases we saw in CPCs and encouraged increased levels of spend.On the desktop side, we did see a fairly substantial bump in click-through-rates, with cost per click staying flat.  This could be attributed to Google’s ever-changing SERP landscape. Between callout extensions, changes to the way ads are displayed, and more minor changes such as testing the way headlines are displayed, we were bound to see positive impacts on CTR.

Seeking Alpha contributor Bram de Haas:

The second thing that is important to takeaway from the Google’s earnings call is that paid clicks and CPC is not all that interesting. Google’s advertising mix is changing with YouTube becoming a more meaningful contributor. The changing mix is driving down CPC’s because Trueview does not have as high a CPC. It makes sense when you realize that video ads are often some type of branding ad without an immediate call to action. They don’t need to be as targeted but do not result in as much direct conversions. It is still a good thing these are becoming increasingly utilized as these enable publishers to monetize content which was previously impossible or very hard to monetize.

Readers: What did you think of Google’s Q1?

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