Google missed consensus revenue and EPS estimates. Stock down almost 10% in after-market. Revenue shortfall appears to have been on Google Sites (vs. affiliates). Adjusted operating income slightly light. Operating income growth decelerates to 41% from 47% in Q3. Free cash flow declines sequentially due to higher-than-expected capital expenditures.
Overall, net revenue decelerated sharply--from 62% growth in Q3 to 52% growth in Q4--after a series of quarters with only modest deceleration. Expect this deceleration to lead to multiple compression: Google's days of trading at 50X cash flow are likely behind it.
Release here. Updating model. Key focus on call will be commentary on Google Sites revenue deceleration, as well as any color on tone of business so far in Q1.
* Net revenue miss: $3.39 billion vs. $3.45 billion estimate.
* EPS (Pro Forma) miss: $4.43-actual vs. $4.45 consensus (whisper was $4.49)
* Operating Income (pro forma) in-line to slight miss: $1.69 billion vs. $1.7 billion.
* Google Sites revenue slightly light: $3.12 vs. $3.2 consensus. Google Network (less valuable) slightly ahead of consensus