On the earnings call, Google management suggested strength in mobile search and YouTube, and that, ex-YouTube, Google search CPCs are growing y/y. Google Website clicks grew a strong 25% (aided by YouTube traffic), while CPCs were down 13%, with about half of the decline due to FX and the rest due to click mix (more YouTube TrueView clicks and a growing International click percentage).
Google suggested that Website revenue growth was driven by strength in mobile and that Google search and mobile CPCs (excluding YouTube) are growing. This is a new disclosure that we think helps address an overhang.
Risks from here are a slowdown in Intl. search revenue, increased FX pressure, greater than expected margin compression on hiring / capex growth above gross profit growth, potential controversy on the Apple search contract renewal, and negative EU regulatory headlines
