According to the Zhitong Finance APP, Google (GOOG.US) will announce its first quarter financial report for the 2021 fiscal year on the morning of April 28th Beijing time.

In the past three quarters, Google's revenue and profit data have been better than expected. And in the past year, as multiple companies began to shift towards remote work and digital transformation, the company's cloud computing business also drove its revenue growth.

However, Google is still facing antitrust scrutiny, so investors will closely monitor whether the company can continue to maintain its strong financial performance while facing charges in the upcoming Q1 financial report.

The current market generally expects Google's earnings per share to be $15.69, compared to $9.87 in the same period last year; Revenue was 51.49 billion US dollars, compared to 41.16 billion US dollars in the same period last year.

Past performance

Google recorded a year-on-year increase of 41.0% in adjusted earnings per share in the fourth quarter of fiscal year 2020, the fastest growth rate since the same period last year. Revenue increased by 23.5% year-on-year, marking the fastest growth rate since the second quarter of fiscal year 2018. Google stated that the revenue growth is mainly driven by its search and YouTube businesses.

In the third quarter of fiscal year 2020, the company's adjusted earnings per share increased by 26.1% year-on-year, a significant improvement from the year-on-year decline in the previous two quarters. Revenue increased by 14.0% year-on-year, showing a significant improvement from the 1.7% decline in the previous quarter. Google pointed out that its third quarter performance reflected an increase in advertising spending for its search and YouTube businesses, as well as continued growth in its cloud computing business and Google Play App Store.

Therefore, the market generally expects Google to maintain its strong performance in the first quarter of the 2021 fiscal year. For the full fiscal year 2021, the market expects adjusted earnings per share to increase by 11.6% year-on-year, slowing down from the 50.3% growth rate in the same period last year. However, revenue is expected to increase by 24.2% year-on-year, which will be the fastest growth rate in at least five years.

In addition, investors will also focus on the revenue growth of Google Cloud, one of Google's main business segments. Analysts generally expect Google Cloud's revenue to continue to show an upward trend.

Google Cloud is one of Google's main business units, providing developers with a highly scalable and reliable platform for building, testing, and deploying applications. At the same time, the department also provides workspace collaboration tools, including applications such as Gmail, Docs, Drive, Calendar, Meet, etc.

As of the end of 2020, Google Cloud's estimated market share in the global cloud market was 9%, ranking third only to Microsoft's (MSFT. US) Azure and Amazon's (AMZN. US) AWS.

Google Cloud's revenue grew at a rate of 43.9%, 52.8%, and 46.4% in fiscal years 2018, 2019, and 2020, respectively. Analysts generally expect that Q1 of the 2021 fiscal year will grow at a similar rate, but the market currently expects a slight slowdown in the growth rate for the entire 2021 fiscal year. The market expects Google's cloud computing business revenue to increase by 45.2% year-on-year in Q1, which is relatively consistent with the growth rates of previous quarters. But it is expected to grow by 42.6% year-on-year for the entire 2021 fiscal year, which is the lowest level in the past four years.

Wall Street Investment Banking Perspectives

Cowen analyst John Blackledge believes that Google's positive outlook reflects a rebound in the advertising market and a surge in search spending, with the company's search revenue expected to grow 45% year-on-year; Increased by 28% compared to the previous quarter. Finally, the analyst also raised its target price from $2400 to $2600, maintaining its "outperform the market" rating.

Morgan Stanley analyst Doug Anmuth stated that Google is the industry's top choice and believes that it is highly likely to become the next technology company with a market value exceeding $2 trillion. The analyst stated, "We still have a positive outlook on Google's improvement in revenue and net profit. The company's search business remains a huge growth driver. In addition, we believe that Google's next growth drivers will be YouTube and cloud computing businesses. ”

Canaccord Genuity Capital Markets analyst Maria Ripps predicts that Google "will benefit from a sustained strong recovery in advertising spending" and points out that "investors will focus on YouTube user engagement and earnings performance, as well as the development of its core search business and updates to Google's FLoC new solution".

Bank of America analyst Justin Post stated that with increasing investments in cloud computing and other areas, Google's profit margin outlook will be crucial. In the fourth quarter of last year, the operating profit margin of Google's cloud computing business was much lower than analysts' expectations. Therefore, the analyst believes that Google's month on month increase in spending will become the focus of the market.

Stephen Ju, an analyst at Credit Suisse, believes that considering the upward trend of Google's stock price this year, investors need to see the growth potential in Google's other businesses. The analyst said, "It is well known that the advertising business is currently in a state of comprehensive recovery. Therefore, we expect that the company's spending on advertising clients will exceed expectations, and our focus will return to YouTube