Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) is slated to report its fourth-quarter and full-year 2018 results after the market closes on Monday, Feb. 4. 

The parent company of search-engine giant Google is going into its report with good momentum with respect to its earnings. Adjusted for one-time factors, Alphabet's earnings have significantly surpassed Wall Street's expectations in each of the three reported quarters of 2018.

In the third quarter, revenue grew 21.5% and earnings per share (EPS) jumped 36.5% year over year to $13.06, easily beating the $10.40 the Street was looking for. In the second quarter, revenue increased 26% and adjusted EPS surged 32% to $11.75, trouncing the $9.59 consensus estimate.  

Alphabet Class A and C shares have both declined 6.8% over the one-year period through Jan. 25. The S&P 500, including dividends, is down 4.3% over this period. The stock, however, remains a solid winner over longer periods, including five years and longer.

Here's what to watch when Alphabet reports.

Overhead view of a person's hands holding a cell phone with Google's home page showing. Various desk-top items, such as a keyboard, shown.

Image source: Getty Images.

Key quarterly numbers

Here are Alphabet's year-ago results and Wall Street's estimates to use as benchmarks.

Metric Q4 2017 Result Wall Street's Q4 2018 Consensus Wall Street's Projected Change (YOY)

Revenue

$32.32 billion

$38.97 billion

20.6%

Adjusted earnings per share (EPS)

$9.70

$10.85

11.9%

Data sources: Alphabet and Yahoo! Finance. YOY = year over year.

Wall Street expects Alphabet's quarterly revenue to grow faster than its earnings on a year-over-year basis. That would indicate that profit margin is contracting. Investors should keep in mind that quarterly results can fluctuate for various reasons, so it's best to consider Alphabet's annual results. 

For full-year 2018, the Street is looking for EPS of $41.78 on revenue of $136.48 billion, which would translate to year-over-year growth of 30.5% and 23.1%, respectively.

For context, here are last quarter's results by segment:

Segment Q3 2018 Revenue Growth (YOY) Q3 2018 Operating Income  Growth (YOY)

Google

$33.59 billion

21.5%

$9.49 billion

10.6%

Other Bets (formerly "Moonshots")

$146 million

(24.8%)

($727 million)

Loss increased by 11.8%

Total segment

$33.74 billion

21.5%

$8.76 billion 10.5%

Data sources: Alphabet and Yahoo! Finance. YOY = year over year.

Within Google, revenue breakdown was as follows:

  • Google properties: a 22% increase to $24.05 billion.
  • Google network members' properties: a 13% increase to $4.9 billion.
  • Google "other revenue": a 29% rise to $4.64 billion

Google: focus on ad growth and TAC, hardware and Cloud

Those first two categories comprise Alphabet's advertising business, which accounts for the bulk of its revenue -- about 86% last quarter. The ad business, however, should slowly become a smaller percentage of the company's overall revenue over time, because Google "other revenue" -- consisting mainly of Google Cloud, hardware, and Google Play -- has been growing faster than it and because the company's autonomous-vehicle unit, Waymo, just began being monetized.

Investors should focus on Google's core ad business -- and particularly on mobile ad growth and traffic acquisition costs (TAC) -- and growth in its hardware and Cloud businesses. Look for sales of Google Home, the company's smart speaker, to get a boost from holiday sales.

A Waymo white Chrysler Pacifica Hybrid minivan on a road next to a sign that says "Pure Michigan."

Image source: Waymo.

Google: Waymo update

Investors can expect Alphabet management to provide an update about Waymo on the earnings call. On Dec. 5, Waymo launched its first commercial autonomous ride-hailing service, Waymo One, in Phoenix. As my colleague Chris Neiger wrote: "In its initial phase, Waymo is only allowing "hundreds" of people who were in the company's Early Rider program (members of the public who've been testing the company's autonomous vehicles) to use Waymo One. ... The trips will be confined to the greater Phoenix area for now." 

For the fourth quarter, Waymo's revenue is going to be immaterial. However, Alphabet has big plans for the unit, including rolling out the ride-hailing service to cities across the country and helping to mass-produce autonomous vehicles. Last week, Waymo announced that it's building "the world's first factory 100% dedicated to the mass production of L4 autonomous vehicles" in Michigan. (An L4, or Level 4, vehicle can drive itself, but only within certain geographic limits.) The company is partnering with Magna International to incorporate its self-driving systems into the vehicles, which will include the Jaguar I-Pace and the Chrysler Pacifica Hybrid minivan.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.