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2,500 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Anat Ashkenazi: On the cloud questions, so first I'm excited that we ended the quarter at $12 billion and a 30% year-over-year growth, very impressive growth. And as I've mentioned, the prepared remark, GCP grew at a much higher rate than overall cloud. Two items to think about from a deceleration perspective. The first is we are lapping a very strong quarter of [indiscernible] deployment in Q4 of 2023. The second is the one you've alluded to. We do see and have been seeing very strong demand for AI products in the fourth quarter in 2024. We exited the year with more demand than we had available capacity. So we are in a tight supply demand situation, working very hard to bring more capacity online. As I mentioned, we've increased investment in CapEx in 2024, continue to increase in 2025, and will bring more capacity throughout the year.
Doug Anmuth: Thank you both.
Operator: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open.
Eric Sheridan: Thank you for taking the question. I'll just ask one. Sundar, with the news that came out of China a little over 2 weeks ago, I think investors have been asking a lot of questions about the long-term cost curve for AI as AI moves from the infrastructure layer to the application layer or from training to inference and maybe even custom silicon becomes more dominant across the theme. I would love to get your perspective on your take on that news a couple of weeks ago and what it might mean for Alphabet longer term. Thank you. |
2,501 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks, Eric. Look, I think there's been a lot of observations on DeepSeek. First of all, I think a tremendous team. I think they've done very, very good work. Look, I think for us it's always been obvious, over time, there's frontier model development, but you can drive a lot of efficiency to serve these models really, really well. And if you look at one of the areas in which the Gemini model shine is the Pareto frontier of cost, performance, and latency and if you look at all three attributes, I think we lead this Pareto frontier. And I would say both are 2.0 flash models or 2.0 flash thinking models. They are some of the most efficient models out there, including comparing to DeepSeek's V3 and R1. And I think a lot of it is our strength of the full stack development into an optimization, our obsession with cost per query, all of that, I think, sets us up well for the workloads ahead, both to serve billions of users across our products and on the cloud side. Couple of things I would say are, if you look at the trajectory over the past 3 years, the proportion of the spend towards inference compared to training has been increasing, which is good because obviously inference is to support businesses with good ROIC. And so I think that trend is good. I think the reasoning models, if anything, accelerates that trend because it's obviously scaling upon inference dimension as well. And so I think, look, I think part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, which will make more use cases feasible. And that's the opportunity space. It's as big as it comes. And that's why you're seeing us invest to meet that moment.
Eric Sheridan: Thank you.
Operator: Your next question comes from Michael Nathanson with MoffettNathanson. Your line is now open. |
2,502 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Operator: Your next question comes from Michael Nathanson with MoffettNathanson. Your line is now open.
Michael Nathanson: Thank you. I have two, one for Philipp and one for Anat. Philipp, question for you is we're starting to see more AI tools on eCommerce sites and something like research with AI recommendations is on Google Shopping. Can you talk about how that product and other AI tools are impacting shopping behavior? I've had that impact in modernization. And then I guess the $75 billion question Anat is, how do you think about long-term capital intensity for this business? It sounds like there's a bit of constraint in terms of getting things built, but how do you think about the modeling of capital intensity going forward, and what are the things that you're looking forward to in terms of whether or not this is the right level of spend? Thank you. |
2,503 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Philipp Schindler: Look, excellent question. We've been using our advances in AI to make search for products on Google even easier, obviously. And in Q4, we actually introduced quite a transformed Google Shopping experience, which we rebuilt from the ground up with AI. And people shop more than a billion times a day across Google. Last quarter, we introduced this fully reinvented Google Shopping experience. In December, we saw roughly, I mentioned, as 13% more daily active users in Google Shopping in the U.S compared to the same period last year. So that's a good development here. And the new Google Shopping experiences, specifically to your question, uses AI to really intelligently show the most relevant products, helping to speed up and simplify your research. You get an AI-generated brief with top things to consider for your search, plus maybe products that meet your needs. So shoppers very often want low prices. So the new page not only includes like deal finding tools like price comparison, price insights, price tracking throughout, but there's also a new and dedicated personalized deals page where you can browse deals for you, and all this is really built on the backbone of AI. So we think this is a very interesting opportunity. |
2,504 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Anat Ashkenazi: And on the question of capital expenditure, and I think you may have two questions in there, one is just the capital intensity and then how would we think about return on that invested capital. So on the first one, certainly we are looking ahead, but we are managing very responsibly with a very rigorous even internal governance process looking at how do we allocate the capacity and what would we need to support the customer demand externally, but also across the Google, the Alphabet business. And as you've seen in the comment I've just made on cloud, we do have demand that exceeds our available capacity, so we'll be working hard to address that and make sure we bring more capacity online. We do have the benefit of having a very broad business, and we can repurpose capacity, whether it's through Google Services or Google Cloud to support, as I said, whether it's Search or GDM or Google Cloud Customers, we can do that in a more efficient manner. We also look at every investment that we make to ensure that we're doing it in the most cost-efficient way to optimize our data center. As you know, our strategy is mostly to rely on our own self-design and build data centers. So they're industry-leading in terms of both cost and power efficiency at scale. We have our own customized TPUs. They're customized for our own workload. So, they do deliver outstanding superior performance and CapEx efficiency. So, we're going to be looking at all that when we make decisions as to how we're going to progress capital investments throughout the coming years.
Michael Nathanson: Thank you.
Operator: Your next question comes from Mark Shmulik with Bernstein. Your line is now open. |
2,505 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Michael Nathanson: Thank you.
Operator: Your next question comes from Mark Shmulik with Bernstein. Your line is now open.
Mark Shmulik: Yes, thanks for taking the question. Sundar, I just wanted to follow-up to Brian's question from earlier. With your own Project Mariner efforts and a competitor's recent launch, it seems there's suddenly really strong momentum on AI consumer agents and kind of catching up to that old Google duplex vision. I think when you look a few years ahead, where do you see consumer agents going and really, what does it mean to Google Search outside of Lens? Is there room for both to flourish or will they eventually be in conflict with each other? Thank you.
Sundar Pichai: Look, I think first of all, we are definitely seeing a lot of progress in the underlying capabilities of these models. Gemini 2.0 was definitely built with the view of enabling more agentic use cases. And so, I actually, and we are definitely seeing progress inside, and I think we'll be able to do more agentic experiences for our users. Look, I actually think all of this expands the opportunity space. I think historically we've had information use cases, but now you can have, you can act on your information needs in a much deeper way. It's always been our vision when we have talked about Google Assistant, et cetera. So I think the opportunity space expands. I think there's plenty of, it feels very far from a zero-sum game. There's plenty of room, I think, for many new types of use cases to flourish. And I think for us, we have a clear sense of additional use cases we can start to tackle for our users in Google Search. And all the early work with AI overview shows that users will react positively to that. So, I'm pretty excited about what's ahead.
Operator: Your next question comes from Ross Sandler with Barclays. Your line is now open. |
2,506 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Operator: Your next question comes from Ross Sandler with Barclays. Your line is now open.
Ross Sandler: Great. One on infrastructure and then one on the guidance on revenue. So Sundar, if we look at the inference cost per 1 million tokens and not the API pricing we see for Gemini versus something like GPT-4, but the raw cost of generating inference tokens on your TPU stack. How much more efficient do you think you guys are in terms of generating 1 million tokens compared to inference costs running on your cloud peers? Do you see this as an advantage as everything shifts to inference? And then Anat, you call out lapping the financial services category strength in 2025 as a bit of a problem for Search. Could you just quantify a little bit of that? Is that kind of the same as when you guys talk about lapping the Asia outbound advertiser channel? Any numbers you could put around that headwind? Thank you very much.
Sundar Pichai: Ross, like, look, the whole TPU project started, V1 was effectively an inferencing chip, so we've always, part of the reason we have taken the end-to-end stack approach is that, so that we can definitely drive a strong differentiation in end-to-end optimizing, and not only on a cost, but on a latency basis and a performance basis. We have the Pareto frontier we mentioned, and I think our full-stack approach and our TPU efforts all play -- give a meaningful advantage, and we plan, you already see that. I know you asked about the cost, but it's effectively captured. When we price outside, we pass on the differentiation. It's partly why we've been able to bring forward flash models at very attractive value props, which is what is driving both developer growth. We've doubled our developers to 4.4 million in just about 6 months. Vertex usage is up 20x last year. And so all of that is a direct result of that approach and so we will continue doing that. |
2,507 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Anat Ashkenazi: And on the question regarding my comment on lapping the strength in financial services, this is primarily related to the structural changes with regards to insurance, it is more specifically within financial services, it was the insurance segment and we saw that continue, but it was a one-time kind of a step up and then we saw it throughout the year. I am not going to give any specific numbers as to what we expect to see in 2025, but I am pleased with the fact that we are seeing and continue to see strength across really all verticals including retail and exiting the year in a position of strength. If anything, I would highlight as you think about the year, the comments I have made about the impact of FX, as well as the fact that we have one less day of revenue in Q1.
Operator: Your next question comes from Justin Post with Bank of America. Your line is now open.
Justin Post: Great. Thank you. A couple for Philipp. You mentioned higher search usage with overviews. Just wondering how you're feeling about overall Search usage. Is it accelerating as you integrate more AI? I know there's a lot of traffic growth at competitors with AI, but just wondering if you're seeing a real increase in total volumes of information gathering. And then second, on YouTube, thinking about kind of maybe a move from more professional content to user-generated content, what is that doing for your usage, and how do you think about the margin impact from that? Thank you. |
2,508 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Philipp Schindler: Maybe on -- Justin on Search usage overall, our metrics are healthy. We are continuing to see growth in Search on a year-on-year basis in terms of overall usage. Of course, within that, AI overviews has seen stronger growth, particularly across all segments of users, including in younger users. So it's being well received. But overall, I think through this AI moment, I think Search is continuing to perform well. And as I said earlier, we have a lot more innovations to come this year. I think the product will evolve even more. And I think as you make Search, as you give, as you make it more easy for people to interact and ask follow-up questions, et cetera, I think we have an opportunity to drive further growth.
Sundar Pichai: And some color on your YouTube question. Look, YouTube ads overall had a very healthy growth in Q4 driven by brand followed by direct response. The U.S. election advertising led brand revenue growth, and we saw nearly double the spending from 2020. I mentioned that we also had a strong contribution from finance, retail, and the tech verticals. So overall, strong operating metrics. Watch time growth remains robust, particularly in key monetization opportunity areas, such as Shorts and Living Room, just to set the stage here one more time. On your question specifically on the UGC side, look, we have a very strong position with creators and we've always said creators are at the center of YouTube success here. They're the number one most important thing we care about and this strong position really gives us a lot of confidence here. Today we have more than 3 million channels that are actually in the YouTube Partner Program, which is really an incredible program. So we're very confident with the position we have and where this goes.
Justin Post: Thank you.
Operator: And our last question comes from Ken Gawrelski with Wells Fargo. Your line is now open. |
2,509 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Justin Post: Thank you.
Operator: And our last question comes from Ken Gawrelski with Wells Fargo. Your line is now open.
Ken Gawrelski: Thank you very much. Two, please. I want to focus on Gemini and the consumer agent side. Sundar, there was some press reports that suggested you have an ambitious goal on growing the usage by the end of '25. Two questions on that, please. First, what’s -- how should we think about the approach that you're going to employ to achieve this goal? Is it more aggressive marketing for Gemini as a standalone product, or is it tighter integration into existing experiences, whether it be search mail, maps, et cetera. And then the second one is, how should we think about the future monetization opportunity of Gemini? Today, it's really a premium subscription offering or a free offering. Over time, do you see an ad component and anything you can share on that, please? Thank you. |
2,510 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: First of all, we've had strong momentum for Gemini on the app side, particularly through the second half of 2024. And some of it is we've made it more easily accessible. We've brought it to, for example, with a dedicated app on iOS, which has been super positively received and definitely getting a lot of traction there. So definitely driving organic growth by putting the product out. We just last week rolled out with our 2.0 series of models. So 2.0 Flash, I mean, I think that's one of the most capable models you can access at the free tier. So that's definitely contributing as well. And so we are rapidly trading. We've had a couple of key innovations there. Gemini Live, I think, has been definitely a hit with users, as well as for advanced users, Gemini Deep Research. So I think a combination of innovation, continually trading on the product and making it better, is driving a lot of usage. And we'll have a lot more to come as we go this year. And we obviously have a partnership with Samsung, so there are other things which will contribute to it as well. On the monetization side, obviously for now we are focused on a free tier and subscriptions, but obviously as you've seen in Google over time, we always want to lead with user experience, We do have very good ideas for native ad concepts, but you will see us lead with the user experience. But I do think we're always committed to making the products work and reach billions of users at scale. And advertising has been a great aspect of that strategy. And so just like you've seen with YouTube, we'll give people options over time. But for this year, I think you will see us be focused on the subscription direction.
Ken Gawrelski: Thank you.
Operator: Thank you and that concludes our question-and-answer session for today. I would like to turn the conference back over to Jim Friedland for any further remarks. |
2,511 | GOOGL | 4 | 2,024 | 2025-02-04 16:30:00 | Alphabet Inc. | 29,096 | Jim Friedland: Thanks everyone for joining us today. We look forward to speaking with you again on our first quarter 2025 call. Thank you and have a good evening.
Operator: Thank you everyone. This concludes today's conference call. Thank you for participating. You may now disconnect. |
2,512 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Operator: Welcome, everyone. Thank you for standing by for the Alphabet Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jim Friedland, Senior Director of Investor Relations. Please go ahead.
Jim Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's third quarter 2024 earnings conference call. With us today are Sundar Pichai, Philipp Schindler and Anat Ashkenazi. Now I'll quickly cover the Safe Harbor. Some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. And now I'll turn the call over to Sundar. |
2,513 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thank you, Jim, and hello, everyone. Q3 was another great quarter. The momentum across the company is extraordinary, as you've seen in recent product launches, and as you will hear on the call today. Our commitment to innovation as well as a long-term focus and investment in AI are paying off and driving success for the company and for our customers. We are uniquely positioned to lead in the era of AI because of our differentiated full stack approach to AI innovation, and we are now seeing this operate at scale. It has three components. First, a robust AI infrastructure that includes data centers, chips and a global fiber network. Second, world-class research teams who are advancing our work with deep technical AI research and who are also building the models that power our efforts. And third, a broad global reach through products and platforms that touch billions of people and customers around the world, creating a virtuous cycle. Let me quickly touch on each of these. We continue to invest in state-of-the-art infrastructure to support our AI efforts from the U.S. to Thailand to Uruguay. We are also making bold clean energy investments, including the world's first corporate agreement to purchase nuclear energy from multiple small modular reactors, which will enable up to 500 megawatts of new 24/7 carbon-free power. We are also doing important work inside our data centers to drive efficiencies while making significant hardware and model improvements. For example, we shared that since we first began testing AI Overviews, we have lowered machine cost per query significantly. In 18 months, we reduced cost by more than 90% for these queries through hardware, engineering and technical breakthroughs while doubling the size of our custom Gemini model. And of course, we use and offer our customers a range of AI accelerator options, including multiple classes of NVIDIA GPUs and our own custom-built TPUs. We are now on the sixth generation of TPUs known as Trillium and continue to drive efficiencies and |
2,514 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | our own custom-built TPUs. We are now on the sixth generation of TPUs known as Trillium and continue to drive efficiencies and better performance with them. Turning to research. Our team at Google DeepMind continues to drive our leadership. Let me take a moment to congratulate Demis Hassabis and John Jumper on winning the Noble Prize in chemistry for their work on AlphaFold. This is an extraordinary achievement and underscores the incredible talent we have and how critical our world-leading research is to the modern AI revolution and to our future progress. Also, congratulations to Jeff Vinton, who spent over a decade here on winning the Noble Prize in physics. Our research teams also drive our industry-leading Gemini model capabilities, including long context understanding, multimodality and agentive capabilities. By any measure, token volume, API calls, consumer usage, business adoption, usage of the Gemini models is in a period of dramatic growth. And our teams are actively working on performance improvements and new capabilities for our range of models. Stay tuned. And they are building out experiences where AI can see and reason about the world around you. Project Astra is a glimpse of that future. We are working to ship experiences like this as early as 2025. We then work to bring those advances to consumers and businesses. Today, all seven of our products and platforms with more than 2 billion monthly users use Gemini models. That includes the latest product to surpass the 2 billion user milestone Google Maps. Beyond Google's own platforms, following strong demand, we are making Gemini even more broadly available to developers. Today, we shared that Gemini is now available on GitHub Copilot with more to come. To support our investments across these three pillars, we are organizing the company to operate with speed and agility. We recently moved the Gemini app team to Google DeepMind to speed up deployment of new models and streamline post-training work. This follows other structural changes that have |
2,515 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | to speed up deployment of new models and streamline post-training work. This follows other structural changes that have unified teams in research, machine learning infrastructure and our developer teams, as well as our security efforts and our platforms and devices team. This is all helping us move faster. For instance, it was a small dedicated team that built Notebook LM, an incredibly popular product that has so much promise. We're also using AI internally to improve our coding processes, which is boosting productivity and efficiency. Today, more than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers. This helps our engineers do more and move faster. I'm energized by our progress and the opportunities ahead, and we continue to be laser-focused on building great products. Let me turn now to the quarterly highlights. In search, recent advancements, including AI Overviews, Circle to Search and new features in Lens are transforming the user experience, expanding what people can search for and how they search for it. This leads to users coming to search more often for more of their information needs, driving additional search queries. Just this week, AI Overview started rolling out to more than 100 new countries and territories. It will now reach more than 1 billion users on a monthly basis. We are seeing strong engagement, which is increasing overall search usage and user satisfaction. People are asking longer and more complex questions and exploring a wider range of websites. What's particularly exciting is that this growth actually increases over time as people learn that Google can answer more of their questions. The integration of ads within AI Overviews is also performing well, helping people connect with businesses as they search. Circle to Search is now available on over 150 million Android devices with people using it to shop, translate text and learn more about the world around them. A third of the people who have tried Circle to Search now use it weekly, a |
2,516 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | text and learn more about the world around them. A third of the people who have tried Circle to Search now use it weekly, a testament to its helpfulness and potential. Meanwhile, Lens is now used for over 20 billion visual searches per month. Lens is one of the fastest-growing query types we see on search because of its ability to answer complex multimodal questions and help in product discovery and shopping. For all these AI features, it's just the beginning, and you will see a rapid pace of innovation and progress here. Next, Google Cloud. I'm very pleased with our growth. This business has real momentum and the overall opportunity is increasing as customers embrace GenAI. We generated Q3 revenues of $11.4 billion, up 35% over last year with operating margins of 17%. Our technology leadership and AI portfolio are helping us attract new customers, win larger deals and drive 30% deeper product adoption with existing customers. Customers are using our products in five different ways. First, our AI infrastructure, which we differentiate with leading performance driven by storage, compute and software advances, as well as leading reliability and a leading number of accelerators. Using a combination of our TPUs and GPUs, LG AI research reduced inference processing time for its multimodal model by more than 50% and operating costs by 72%. Second, our enterprise AI platform, Vertex, is used to build and customize the best foundation models from Google and the industry. Gemini API calls have grown nearly 40x in a 6-month period. When Snap was looking to power more innovative experiences within their My AI chatbot, they chose Gemini's strong multimodal capabilities. Since then, Snap saw over 2.5 times as much engagement with My AI in the United States. Third, customers use our AI platform together with our data platform, BigQuery, because we analyze multimodal data no matter where it is stored with ultra-low latency access to Gemini. This enables accurate real-time decision-making for customers like Hiscox, one of the |
2,517 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | with ultra-low latency access to Gemini. This enables accurate real-time decision-making for customers like Hiscox, one of the flagship syndicates in Lloyd's of London, which reduced the time it took to code complex risks from days to minutes. These types of customer outcomes, which combine AI with data science have led to 80% growth in BigQuery ML operations over a 6-month period. Fourth, our AI-powered cybersecurity solutions, Google Threat Intelligence and Security operations are helping customers like BBVA and Deloitte prevent, detect and respond to cybersecurity threats much faster. We have seen customer adoption of our Mandiant-powered threat detection increased 4x over the last 6 quarters. Fifth, in Q3, we broadened our applications portfolio with the introduction of our new customer engagement suite. It's designed to improve the customer experience online and in mobile apps, as well as in call centers, retail stores and more. A great example is Volkswagen of America, who is using this technology to power its new myVW Virtual Assistant. In addition, the employee agents we delivered through Gemini for Google Workspace are getting superb reviews. 75% of daily users say it improves the quality of their work. Moving now to YouTube. For the first time ever, YouTube's combined ad and subscription revenue over the past four quarters has surpassed $50 billion. Together, YouTube TV, NFL Sunday Ticket and YouTube Music Premium are driving subscription growth for the platform. And we are leaning into the living room experience with multi-view and a new option for creators to organize content into episodes and seasons, similar to traditional TV. At Made on YouTube, we announced that Google DeepMind's most capable model for video generation VO is coming to YouTube Shorts to help creators later this year. Next, platforms and devices. Gemini's deep integration is improving Android. For example, Gemini Live lets you have free flowing conversations with Gemini. People love it. It's available on Android, including Samsung |
2,518 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Gemini Live lets you have free flowing conversations with Gemini. People love it. It's available on Android, including Samsung Galaxy devices. We continue to work closely with them to deliver innovations across their newest devices with much more to come. At Made by Google, we unveiled our latest Pixel 9 series of devices featuring advanced AI models, including Gemini Nano. We have seen strong demand for these devices, and they've already received multiple awards. Turning to Other Bets. I want to highlight Waymo, the biggest part of our portfolio. Waymo is now a clear technical leader within the autonomous vehicle industry and creating a growing commercial opportunity. Over the years, Waymo has been infusing cutting-edge AI into its work. Now each week, Waymo is driving more than 1 million fully autonomous miles and serves over 150,000 paid rides. The first time any AV company has reached this kind of mainstream use. Through its expanded network and operations partnership with Uber in Austin and Atlanta, plus a new multiyear partnership with Hyundai, Waymo will bring fully autonomous driving to more people and places. By developing a universal driver, Waymo has multiple paths to market. And with its sixth generation system, Waymo significantly reduced unit costs without compromising safety. Before I close, I'm delighted to welcome our new CFO, Anat. We are thrilled to have her on board, and you will hear from her shortly. And as always, I want to express my gratitude to our employees worldwide. Your dedication and hard work have made this another exceptional quarter for Alphabet. Now over to you, Philipp. |
2,519 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Philipp Schindler: Thanks, Sundar, and hello, everyone. I'll start with performance for the quarter and then describe the progress we're seeing across ads, YouTube and partnerships, highlighting the impact AI is already having on our business. Google Services delivered revenues of $76.5 billion for the quarter, up 13% year-on-year. Search and other revenues grew 12% year-on-year, led by growth in the financial services vertical due to strength in insurance, followed by retail. YouTube ads revenues grew 12% year-on-year, driven by brand, closely followed by direct response. Network revenues were down 2% year-on-year. In subscriptions, platforms and devices, year-on-year revenues were up 28%, driven by growth in subscriptions as well as the launch of our Made by Google devices in the third quarter. Before I double-click into ads, YouTube and partnerships, a few comments on search. Whether they're using their voice to find answers on the go or opening their camera to explore the world around them, people are expanding how they ask questions in search as well as the type of questions they ask. New behaviors create new opportunities to help us connect businesses and consumers via amazing commercial experiences. As GenAI expands what's possible, we continue to see a significant opportunity in search. Let me take a minute to explain why. AI really supercharges search. Our new AI-powered features make searches more helpful, and we continue to see great feedback, particularly from younger users. For example, with Circle to Search, where we see higher engagement from users aged 18 to 24. AI is expanding our ability to understand intent and connect it to our advertisers. This allows us to connect highly relevant users with the most helpful ad and deliver business impact to our customers. Let me share two new ad experiences we have rolled out alongside our popular AI-powered features in search. First, as you heard from Sundar, every month, Lens is used for almost 20 billion visual searches with 1 in 4 of these searches |
2,520 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | First, as you heard from Sundar, every month, Lens is used for almost 20 billion visual searches with 1 in 4 of these searches having commercial intent. In early October, we announced product search on Google Lens. And in testing this feature, we found that shoppers are more likely to engage with content in this new format. We're also seeing that people are turning to Lens more often to run complex multimodal queries, voicing a question or inputting text in addition to a visual. Given these new user behaviors, earlier this month, we announced the rollout of shopping ads above and alongside relevant Lens visual search results to help better connect consumers and businesses. Second, AI Overviews, where we have now started showing search and shopping ads within the overview for mobile users in the U.S. As you remember, we've already been running ads above and below AI Overviews. We're now seeing that people find ads directly within AI Overviews helpful because they can quickly connect with relevant businesses, products and services to take the next step at the exact moment they need. As I've said before, we believe AI will revolutionize every part of the marketing value chain. Let's start with creative. Advertisers now use our Gemini-powered tools to build and test a larger variety of relevant creatives at scale. Audi used our AI tools to generate multiple video image and text assets in different links and orientations out of existing long-form videos. It then fed the newly generated creatives into demand gen to drive reach, traffic and booking to their driving experience. The campaign increased website visits by 80% and increased clicks by 2.7 times, delivering a lift in their sales. Last week, we updated image generation at Google Ads with our most advanced text-to-image model, Imagine 3, which we tuned using ads performance data from multiple industries to help customers produce high-quality imagery for their campaigns. Advertisers can now create even higher-performing assets for PMax, Demand Gen app and Display |
2,521 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | imagery for their campaigns. Advertisers can now create even higher-performing assets for PMax, Demand Gen app and Display campaigns. Turning to media buying. AI-powered campaigns help advertisers get faster feedback on what creatives work, where and redirect their media buying. Using Demand Gen, DoorDash tested a mix of image and video assets to drive more impact across Google and YouTube's visually immersive surfaces. They saw a 15 times higher conversion rate at a 50% more efficient cost per action when compared to video action campaigns alone. Last and most importantly, measurement. This quarter, we extended availability of our open source marketing mix model, Meridian to more customers, helping to scale measurement of cross-channel budgets to drive better business outcomes. On YouTube, we remain focused on building a platform that enables creators to thrive and unlocking a whole new world of creativity with AI. Creators are at the heart of the YouTube ecosystem and the content they are making is driving robust growth in watch time across the platform. We're also using AI to greatly improve recommendations on YouTube. Driven by Gemini, our large language models have a deeper understanding of video content and viewers' preferences. As a result, they can recommend more relevant, fresher and personalized content to the viewer. Short-form creation continues to thrive on YouTube. Shorts monetization improved again this quarter, and we continue to significantly close the gap with in-stream video, particularly in the U.S. and other more highly monetizing markets. Of all the channels uploading to YouTube each month, 70% are uploading shorts. And we recently announced a top requested feature, the ability to upload shorts up to 3 minutes long. Also, advertisers can now book first position on Shorts blocks in close to 40 markets. We're unlocking more opportunities in the living room. Our momentum here continues as we maintain our status as the number one streamer in the U.S. according to Nielsen. This is driven by the |
2,522 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | here continues as we maintain our status as the number one streamer in the U.S. according to Nielsen. This is driven by the strength of our creators, such as Michelle Carr and Rhett & Link, who are increasingly crafting experiences designed specifically for the big screen, and it's paying off. The number of creators making the majority of the YouTube revenue on TV screens is up more than 30% year-on-year. YouTube is becoming a premier destination for sports watching. People come for the game and stay for the commentary and around the game content from creators like Evelyn Gonzalez, Adam W and Brad Coleman. During the Olympics, content from Paris 2024 had over 12 billion views on YouTube. More than 850 million unique viewers watched over 40 billion minutes of content with 35% on their TV screens. And recently, we kicked off our second season of NFL Sunday Ticket on YouTube TV, which continues to receive a positive reception from advertisers, our partners at the NFL and fans. We have continued to invest in our product experience with improvements to multiview and deeper integrations for fantasy football fans. Following up on my remarks from last quarter about Brandcast, we had a strong upfront performance with commitments up about 20% year-on-year. As always, let me wrap with the strong momentum we're seeing in partnerships. More and more of our partners are recognizing the breadth of our technologies and building solutions that leverage the very best of Google. For example, our recently announced strategic partnership with Vodafone Group spans Google Cloud, AI, Android ads and digital services. This multibillion-dollar partnership will bring these technologies to more than 330 million customers across Europe and Africa. We are collaborating on more than 30 initiatives across 7 areas, including generative AI from consumers, a best-in-class TV platform, hardware and cybersecurity. With that, a heartfelt thank you to Google everywhere for their extraordinary commitment and to our customers and partners for their |
2,523 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | that, a heartfelt thank you to Google everywhere for their extraordinary commitment and to our customers and partners for their continued collaboration and trust. Anat, welcome to the team. It's great to have you with us. Over to you. |
2,524 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Anat Ashkenazi: Thank you, Philipp. And thanks, Sundar, for the words of welcome. My comments will focus on year-over-year comparisons for the third quarter, unless I state otherwise. I will start with the results at the Alphabet level and will then cover our segment results. I'll end with high-level commentary on investment at the Alphabet level. We had another strong quarter in Q3 with robust momentum across the business. Consolidated revenue increased by 15% or 16% in constant currency. Search remained the largest contributor to revenue growth, followed by a robust 35% growth in cloud. Total cost of revenue was $36.5 billion, up 10%. Tech was $13.7 billion, up 9%. We continue to see a revenue mix shift with Google Search growing at double-digit levels, while network revenue, which have a much higher TAC rate declined. Other cost of revenue was $22.8 billion, up 11%, with the increase primarily driven by content acquisition costs, primarily for YouTube, an increase in depreciation associated with higher level of investment in our technical infrastructure and higher hardware costs associated with the pull forward of our Made by Google launches from the fourth to the third quarter. Total operating expenses increased 5% to $23.3 billion. The increase was primarily driven by facilities-related charges as results of actions were taken to further optimize our office space footprint globally, followed by depreciation, partially offset by year-on-year decline in charges for legal and other matters. R&D investments increased by 11%, primarily driven by increases in compensation and depreciation expenses. Sales and marketing expenses increased 5%, primarily reflecting investment in advertising and promotional efforts related to the Made by Google launches, as well as for AI and Gemini. G&A expenses declined by 10%, primarily due to lower charges for legal and other matters. Operating income increased 34% to $28.5 billion and operating margin increased to 32%. Net income increased 34% to $26.3 billion and earnings per |
2,525 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | 34% to $28.5 billion and operating margin increased to 32%. Net income increased 34% to $26.3 billion and earnings per share increased 37% to $2.12. We're pleased with the progress we're making in reengineering our cost structure, which is reflected in our operating margin expansion this quarter, while also continuing to invest in the business to bring innovation to consumers, creators and enterprises. We delivered free cash flow of $17.6 billion for the third quarter and $55.8 billion for the trailing 12 months. Year-on-year free cash flow was negatively impacted by the following items. In 2023, we deferred cash tax payments from the second and third quarter to the fourth quarter. And in Q3 2024, we made a $3 billion cash payment related to the 2017 EC shopping fine. We ended the quarter with $93 billion in cash and marketable securities. Now turning to segment results. Google Services revenue increased 13% to $76.5 billion. Google Search and other advertising revenue increased by 12% to $49.4 billion. The robust performance of search was broad-based across verticals, led by the financial services vertical due to strength in insurance followed by retail. YouTube advertising revenue increased 12% to $8.9 billion, driven by brand, followed by direct response advertising. As Philipp mentioned, we're seeing strong momentum in YouTube, including robust growth in watch time across the platform and are excited about the new features and products we're bringing to creators. Network advertising revenue of $7.5 billion were down 2%. In the third quarter, the year-on-year growth in all our advertising revenue lines was impacted by the increase in strength in advertising revenue in Q3 of last year, in part from APAC-based retailers. Subscription platforms and devices revenue increased 28% to $10.7 billion, reflecting growth in subscription revenues, as well as the launch of our Made by Google devices in the third quarter. We continue to have significant growth in our subscription products, driven primarily by YouTube TV |
2,526 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | in the third quarter. We continue to have significant growth in our subscription products, driven primarily by YouTube TV and YouTube Music Premium, as well as Google One, primarily due to increases in the number of paid subscribers. With regards to platforms, we're pleased with the performance in play, primarily driven by an increase in buyers. Google Service operating income increased by 29% to $30.9 billion, and operating margin was 40%. Turning to the Google Cloud segment, which continued to deliver very strong results this quarter. Revenue increased by 35% to $11.4 billion in the third quarter, reflecting accelerated growth in GCP across AI infrastructure, generative AI solutions and core GCP products. Once again, GCP grew at a rate that was higher than cloud overall. We also saw strong Google Workspace growth, primarily driven by increases in average revenue per seat. As you just heard from Sundar, the robust innovation and expanded AI offerings within our cloud business are allowing existing and new customers to realize measurable business benefits, including reduced cost, greater customer engagement, faster response time and better revenue conversion. Google Cloud operating income increased to $1.9 billion and operating margin increased to 17%. The operating margin expansion was driven by strong revenue performance across cloud AI products, core GCP and Workspace, as well as ongoing efficiency initiatives. As to our Other Bets, for the third quarter revenue were $388 million and operating loss was $1.1 billion. I'll highlight just a couple of accomplishments in the quarter for Waymo and Wing. We're excited about the progress we're seeing in Waymo, as Sundar mentioned, and the increase in the number of paid rides. We're planning to continue to expand our geographic coverage and reach more customers in existing markets and new markets. Wing, our drone delivery company, recently passed the 1-year anniversary of scaling its partnership with Walmart in the Dallas-Fort Worth area, now operating in 11 stores |
2,527 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | passed the 1-year anniversary of scaling its partnership with Walmart in the Dallas-Fort Worth area, now operating in 11 stores and serving 26 different cities and towns. Turning to Alphabet level activities. The largest component of this line is our investment in AI research and development activities, which support all of Alphabet. There were two notable items that impacted the operating loss in Alphabet level activities. First, a $607 million charge related to decisions we've made to further optimize our physical footprint and office space globally; and second, our ongoing investments in AI R&D, including the full quarter effect of the organizational changes we've made in May to move some additional AI teams from Google Services to Google DeepMind. With respect to CapEx, our reported CapEx in the third quarter was $13 billion, reflecting investment in our technical infrastructure with the largest component being investment in servers, followed by data centers and networking equipment. Looking ahead, we expect quarterly CapEx in the fourth quarter to be at similar levels to Q3, keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. Our expansion of data center capacity is expected to bring economic benefits to countries and communities where we are investing. In the third quarter alone, we made announcements of over $7 billion in planned data center investments with nearly $6 billion of that in the U.S. In Q3, we also returned value to shareholders in the form of $15.3 billion in share repurchases and $2.5 billion in dividend payments. Overall, we returned a total of nearly $70 billion over the trailing 12 months to shareholders. As we look forward, we're working to balance our investments in AI and other growth areas with the cost discipline needed to fund those activities. As we think about the remainder of 2024, there are a couple of dynamics to consider. In terms of revenue, year-on-year growth in advertising revenue will continue to be impacted by the |
2,528 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | of dynamics to consider. In terms of revenue, year-on-year growth in advertising revenue will continue to be impacted by the increasing strength in advertising revenue in the second half of 2023, in part from APAC-based retailers. And there will be a headwind to year-over-year growth in subscription platforms and devices revenue in the fourth quarter due to the pull forward of our Made by Google launches into the third quarter this year. In terms of expenses, we'll continue to see increases in depreciation and expenses associated with higher level of investment in our technical infrastructure, partially offset by a slight benefit from the cost revenue associated with our devices due to the pull forward of hardware launches into Q3. Now before going into Q&A, as the new CFO, I would like to share a few thoughts on how I'm approaching and thinking through growth, cost structure and capital allocation and expect to hear more from me on these topics in the coming quarters. As I look at the business, I see opportunities for further growth propelled by AI and the underlying momentum across the business. You heard about some of these on the call today. I also believe that we are well positioned to deliver meaningful innovation, which will translate to revenue given our strength in the core pillars that are required to succeed in AI at scale. Realizing those opportunities and great innovation in AI requires global reach, which we have through our products and platforms, as well as continued meaningful capital investment. And while we have a strong balance sheet to be able to support these investments, we will be looking for efficiencies so that we can fund innovation in priority areas. Sundar, Ruth and our leadership team started important work to reengineer our cost structure including efforts such as optimizing our headcount growth, our physical footprint, improving the efficiencies of our technical infrastructure and streamlining operations across the company through the use of AI. I plan to build on these efforts, |
2,529 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | infrastructure and streamlining operations across the company through the use of AI. I plan to build on these efforts, but also evaluate where we might be able to accelerate work and where we might need to pivot to free up capital for more attractive opportunities. Thank you. Sundar, Philipp and I will now take your questions. |
2,530 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Operator: Thank you. [Operator Instructions] And our first question comes from Brian Nowak with Morgan Stanley. Your line is now open.
Brian Nowak : Thanks for taking my questions. I have a two-parter, Sundar. The first one, over the course of the last year plus, you've sort of showcased a lot of different types of new GenAI enabled search products to sort of reimagine the search experience. Can you help us hone in on one or two 0these products that you're most excited about that you think over the next 2 to 3 years could really lead to more durable multiyear search growth once they scale? And then the second one, just as we're sort of thinking through constraints to how quickly they come out, what are sort of the key constraints that you see to really reimagining search and scaling it out across 2 billion to 3 billion people? Thanks. |
2,531 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks, Brian. Great question. Look, it's been an extraordinary year of innovation. I mentioned in my remarks about Circle to Search Lens now with video search approaching over 20 billion queries a month and obviously, AI Overviews. And with each of these changes, we are definitely expanding what's possible in search. And it's been really heartening to see users adapt. They understand they can ask more queries. They come back more often. And so - and we have seen growth there. I think we are with very - while we've rolled out AI Overviews to over 1 billion users, there is a lot more innovation there we are actively working on. So I expect search to continue to evolve significantly in 2025, both in the search product and in Gemini. And so I think that's the opportunity ahead. I think we are in early days of what is a powerful new technology. And with it, I think we can do a lot more for our users, but at the same time, underpin it on the foundational bedrock of quality and trust and user experience, which we have always done. So we are at 1 billion people. I don't necessarily see a constraint there. Obviously, things like latency, cost per query, et cetera. But as you've seen us over the past 18 months make substantial progress. So we'll continue rolling it out more, and we'll keep evolving it. I think search, if I were to take a 12-month outlook, I think is going to continue to evolve and we'll be at the forefront of that innovation.
Operator: Our next question comes from Doug Anmuth with JPMorgan. Your line is now open.
Doug Anmuth: All right. Thanks for taking the question. Perhaps for Sundar and Anat. Can you talk more about the infrastructure advantages and CapEx efficiencies you've generated from Google's own TPUs? And how does that influence your CapEx spending going forward relative to peers and other leading cloud service providers? Thanks. |
2,532 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks, Doug. I'll take the first part and Anat can give color on the CapEx spending part. Look, I think one of the - we are well positioned because in our AI infrastructure, we have a comprehensive solution set, right? We have all the leading AI accelerators GPUs, TPUs as well as CPUs, and we are investing in all of them. We have a wonderful partnership with NVIDIA. We are excited for the GB200s, and we'll be one of the first to provide it at scale. On the TPU front, I think we have - not only are we in our sixth generation. I just spent some time with the teams on the road map ahead. I couldn't be more excited at the forward-looking road map, but all of it allows us to both plan ahead in the future and really drive an optimized architecture for it. And I think because of all this, both we can have best-in-class efficiency, not just for internal at Google, but what we can provide through cloud, and that's reflected in the growth we saw in our AI infrastructure and GenAI services on top of it. So I'm pretty excited about how we are set up, and we'll continue executing there. And maybe Anat can give comments on the CapEx spending. |
2,533 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Anat Ashkenazi: Yeah, sure. So let me provide a little more color on our capital investments and certainly an important area in the - this time of investments in AI. As you saw in the quarter, we invested $13 billion in CapEx across the company. And as you think about it, really it's divided into two categories. One is our technical infrastructure, and that's the majority of that $13 billion. And the other one goes into areas such as facilities, the Bets and other areas across the company. Within TI, we have investments in servers, which includes both TPUs and GPUs. And then the second categories are data centers and networking equipment. This quarter, approximately 60% of that investment in technical infrastructure went towards servers and about 40% towards data center and networking equipment. And as you think about them, we offer both GPUs and TPUs both internally and to our customers. So we have choices and options based on what our customer needs and what our internal needs are. And as you think about the next quarter and going into next year, as I mentioned in my prepared remarks, we will be investing in Q4 at approximately the same level of what we've invested in Q3, approximately $13 billion. And as we think into 2025, we do see an increase coming in 2025, and we will provide more color on that on the Q4 call, likely not the same percent step-up that we saw between '23 and '24, but additional increase. |
2,534 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: The one other thing I would add on the - Doug, on your first part of the question on the TPUs is if you look at the flash pricing we have been able to deliver externally, I think - and how much more attractive it is compared to other models of that capability, I think probably that gives a good sense of the efficiencies we can generate from our architecture. And so - and we are doing the same that for internal use as well. The models for search, while they keep going up in capability, we've been able to really optimize them for the underlying architecture, and that's where we are seeing a lot of efficiencies as well.
Doug Anmuth: Thank you.
Operator: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open.
Eric Sheridan: Thank you for taking the question. And Anat congrats on the new role. And welcome to Alphabet. Sundar, maybe one for you on Waymo. What are the key learnings as Waymo has rolled out to additional cities in terms of consumer adoption of the product and how you think about go-to-market strategies for Waymo? And then maybe one for Philipp. In terms of looking at YouTube trends by long-form versus short-form video or shorts, how are you seeing consumption versus monetization trends continue to evolve for YouTube as broken down maybe in that means? Thank you. |
2,535 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks, Eric. On Waymo, obviously, it's been an exciting year, both in the Phoenix market and in San Francisco. We've definitely scaled and particularly scaled paid rides and definitely surprised us on the positive in terms of how much consumers are loving the experience from a safety standpoint, privacy standpoint, reliability standpoint, et cetera. So I think all of that has been on the positive side. And obviously, the product will continue to improve. So for us, we are mainly focused on each city as we go, the pace at which we can now do additional city gets easier. So we are definitely accelerating that way. That's why we - you've seen us move into L.A. We're also striking partnerships in newer and unique ways. Hence, the Uber partnership and expansion to Austin and Atlanta. And we have more options where we are looking at the driven by Waymo model with other network partners, fleet managers, et cetera. So it's an exciting moment, but we are still obviously being safety focused, but are looking to scale and testing out a variety of models and which will help us plan ahead well for 2025 and beyond. |
2,536 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Philipp Schindler: Yes. And to your question on YouTube Shorts, consumption versus monetization, maybe we start with the watch time. It continues to grow actually across YouTube with particular strength in shorts and in the living room. Just to give you a number, over 70 billion YouTube Shorts are watched every day. On the monetization side, the monetization rate of shorts relative to in-stream viewing is continuing to show a healthy rate of growth. The gap continues to narrow, particularly in the U.S. We also see it in other more highly monetizing markets. And we continue to work very closely with our advertisers. We're committed to providing them with very effective ways to reach the growing audience here. I talked about advertisers now being able to book first position on Shorts blocks. That's exciting. Shorts are also integrated into video reach campaigns, YouTube Select. So you're really giving brands the precise targeting options here. So yeah, we are pleased with the progress we're making here.
Operator: Our next question comes from Ross Sandler with Barclays. Your line is now open.
Ross Sandler: Hi, everybody. Thanks for taking the questions. Congrats, Anat. Two, if that's okay. So first, Sundar, given the high stakes around native AI product usage, are there any milestones you can share around where Gemini usage is compared to the 250 million weekly active users that ChatGPT is seeing right now? And then the second question is, I'm sure this is something you guys have been thinking about for a while, but it looks like the way that the Google versus DOJ search trial is going, there's a decent likelihood that the Apple ISA contract and some of the Android pre-install contracts are going to be voided out at some point in the future. So I guess the question is, what plans do we have in place to recapture some of the usage that might be going away in those search access points? How can we gain share on iOS queries if the Safari toolbar access point were to change? Thank you very much. |
2,537 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks, Ross. Look, I think, you know, obviously, we are serving Gemini across a lot of touch points, including it's now over 1 billion people are using it in search accessing. We are getting it across our products. The Gemini app itself has very strong momentum on user growth. Our API volume, I commented on the Gemini APIs having gone up 14x in the past 6 months. So we are seeing growth across the board. And the Gemini integration into Google Assistant is going super well on Android. The user feedback is positive. So we are continuing to roll that out more. So I think we'll - you will see us we are investing in the next generation of models. And as part of that, we are investing in scaling up the usage of the - both directly to the models as both on the consumer and the developer side. So I think I'm pleased with the momentum there. On the second - on the legal trials, obviously, I don't want to - it's not appropriate for me to speculate given it's in the middle of ongoing litigation. But what I would say is stepping back, look, we've always and even as the court acknowledged, clearly, we have reached a position of success because we have deeply innovated, and we are continuing to do so. People have chosen us because they view it as the best product, be it consumers or partners. And we have a long track record of working hard to make sure our products are as easily available to users as possible across all platforms. So all that approach and all the learnings over the years, I think, will all be - will give us a strong foundation. First of all, we plan to vigorously defend these cases. And some of the early proposals from the DOJ, et cetera, have been far reaching. And we plan to - I think they could have unintended consequences, particularly to the dynamic tech sector and the American leadership there. And so we plan to be - we plan to engage very vigorously there. Thanks.
Ross Sandler: Thank you.
Operator: Your next question comes from Justin Post with BAML. Your line is now open. |
2,538 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Ross Sandler: Thank you.
Operator: Your next question comes from Justin Post with BAML. Your line is now open.
Justin Post: Great. Thank you. I wanted to ask a little bit more about AI Overviews, maybe two parts. You mentioned you're seeing increasing queries or activity. Could you help us understand that for the billion users who have had access to the product, what you're seeing there? And then on the monetization side, is there a chance that AI Overviews would help monetize some of the information queries that maybe you weren't making much monetization from with old formats? Thank you.
Sundar Pichai: Thanks, Justin. Look, I think the main thing I would say is as we have rolled out, we're obviously now scaling it out. We just rolled it out to 100 new countries and territories, and that's what will get us to billion users. But amongst the users where we had already rolled out, we clearly see strong engagement. It's one of the most positive user satisfaction launches we have done in search. And it is increasing overall search usage, like people are asking more complex questions, different types of questions. They are exploring a wider range of websites. And what's particularly exciting is that this growth actually increases over time as people learn to adapt to that new behavior. So I'll stick to those comments. And I think - to the second part of your question on the monetization side, I think Philipp can answer more of that. Philipp?
Philipp Schindler: Yeah. So look, the transition here is working well, including for ads. As you know, we recently launched ads within AI Overviews on mobile in the U.S. And this really builds on our previous rollout of ads above and below the AI Overviews. So overall, for AI Overviews, we see monetization at approximately the same rate, which gives us a really strong base on which we can innovate even more. And specifically to your question of monetizing queries where we can monetization potentially at the moment, yes, I can see that there is opportunity for that. |
2,539 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Justin Post: Thank you.
Operator: Your next question comes from Michael Nathanson with MoffettNathanson. Your line is now open.
Michael Nathanson: Thanks. I have one for Sundar. Sundar, there was this perception and even false that Alphabet was not as innovative on AI as they should. And it clearly shows that that was wrong. You're moving pretty quickly rolling out new products. Can you talk a bit about how you may have changed your structure? I know you've combined some assets, but talk a bit about how you've maybe rethought how you go to market with some of your innovation products? And maybe what's changed operationally as AI has picked up steam for you guys? |
2,540 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks, Michael. Look, I definitely think it's an extraordinary opportunity. And I think the company, given the important moment, we had to gear up to build models from scratch that could be productionized at scale on our architecture. And that's what the Gemini era was about. So there was a fixed cost of getting it all set up and getting the Gemini era underway. But now I think we are in much more of a virtuous cycle with a lot of velocity in the underlying models. We've had two generations of Gemini model. We are working on the third generation, which is progressing well. And teams internally are now set up much better to consume the underlying model innovation and translate that into innovation within their products. So now all the seven products, which have 2 billion users each have done their first versions of incorporating Gemini, and there is aggressive road map ahead for 2025. I mentioned earlier, search alone. I think there's a lot more we can do. And we are also enabling smaller teams to ship newer experiences and Notebook LM was the first instantiation of those types of efforts as well. Through it all, within, we had to do this when the company evolved from desktop to mobile. We are restructuring the company. Effectively, if you think of Google as a neural network, we are forming new synapses, which work much better to adapt to this moment. And I think that sets us up well for the year ahead. And we are bringing all of this innovation to the outside world through cloud as well. And so we are going to do that. And so that's an additional opportunity at this moment.
Michael Nathanson: Thanks, Sundar.
Operator: Our next question comes from Mark Mahaney with Evercore. Your line is now open. |
2,541 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Michael Nathanson: Thanks, Sundar.
Operator: Our next question comes from Mark Mahaney with Evercore. Your line is now open.
Mark Mahaney: Okay. I'd like to ask two questions, please, to Anat. First, the margins at cloud have really started to ramp nicely. There are comps in the industry with still materially higher operating margins. I imagine that's a matter of scale and trying to catch up from a third place position. But how do you think about the margin trends that you're seeing? And what's your level of confidence that those margins can kind of match up to other industry players that are doing closer to 30% margins? And then secondly, just across the board, when you think about the business that's running at, what, 32% operating margins this last quarter, and you come in looking at this fresh, is it clear to you that there are a lot of kind of newfound cost efficiencies or ongoing cost efficiencies? Like what do you see as the biggest opportunities to kind of take those margins and maybe over time, take them materially higher? Thank you very much. |
2,542 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Anat Ashkenazi: Thanks, Mark, for both of these questions. Let me start on the cloud margin. So certainly, very pleased to see not just the top line growth rate, but the margin expansion to 17%, really outstanding work by our cloud team to drive continued benefit to customers. And as you think about that margin expansion, really, it's a few things. You've mentioned one of them. The first is scale. Obviously, as we scale the business, we have more opportunity for margin expansion. But the second, and shouldn't be underestimated is the work the team has done to drive efficiencies across the cloud business, and we're seeing those come through, whether it's through headcount management or facilities management, other process efficiencies. We're seeing that go to the bottom line and driving the results you're seeing this quarter. Hard to obviously compare to any of our peers or competitors. It's a different business, but more to come. Now the one thing to remember, and I mentioned this in my prepared remarks, this is an area that requires investment. And a lot of these investments, you think about servers, et cetera, is based on demand we're seeing from customers. So this will translate to revenue in the fairly short term. But that means there are headwinds associated with the - overall, the annual run rate or costs associated with these investments, whether it's in the form of depreciation or just construction costs that are not capitalized, et cetera. So we'll continue to drive efficiency in the business to try and offset some of these. But this is how I'm thinking about the dynamics for cloud. Overall, for the business, this is one of my key priorities is to look across the organization to see what we can do in terms of driving further efficiencies. There's really good work that was done started by Ruth, Sundar and the rest of the lead team to reengineer the cost base. But I think any organization can always push a little further. And I'll be looking at additional opportunities really across all the elements that |
2,543 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | can always push a little further. And I'll be looking at additional opportunities really across all the elements that I've mentioned in my prepared remarks, think not just about the size of the organization, but mostly how we operate and how we run the business. And I think when you simplify the organization, Sundar just made a few comments on that. When we use AI within our own processes and how we get work done, there are some efficiencies or opportunities for efficiencies. Now all of that will go against substantial increases in capital investment, as I've mentioned, going into 2025. And again, I'll give more color when we are on the Q4 call. So hopefully, we'll be able to drive efficiencies to work towards offsetting some or all of that increase. |
2,544 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Mark Mahaney: Thank you very much.
Operator: Our next question comes from Ken Gawrelski with Wells Fargo. Your line is now open.
Ken Gawrelski: Thank you so much. Two, if I may. First, just on search, why does it make sense to have completely - why doesn't it make sense to have two completely different search experiences. One, an agent-like answers engine, and then two, a links-based more traditional search engine. You could innovate on both and let the consumer decide. It's - maybe think of it as the ultimate A/B test. So I'd be curious to get your thoughts there. And then the second, if you could touch a little bit on the consumer environment in 4Q. Perhaps nobody has a better view into the health of the consumer in multiple verticals. If you could talk a little bit about - you talked about tougher comps on the Asia e-commerce side, but any other trends you could point out be around the election or fewer holiday days this year, that would be really helpful. Thank you. |
2,545 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Why don't I take the first part and then Philipp can give color on the consumer vertical trends. On the first part, look, in this moment, people are using a lot of buzzwords like answer engines and all that stuff. I mean, Google started answering questions about 10 years ago in our search product with featured snippets. So look, I think ultimately, you are serving users. User expectations are constantly evolving. And we work hard to stay a step ahead, anticipate and stay a step ahead. And this is why we've kind of really brought multimodality on the input side and the output side in search pretty natively. And so we'll continue expanding innovations there. I do think having two surfaces for us allows us to experiment more. And there are - I view this moment as moment in which there are new use cases which we will be able to do, which we couldn't have done before. And so having the flexibility, having product surfaces where we can move very, very fast, I think, is actually helpful. And so we are embracing it and going to lean into this moment like we have done in the past year, and I think that will play out well for users. Philipp?
Philipp Schindler: Yes. On the vertical trends, look, I called out search and other revenues being led by growth in the financial services due to improved economics in the insurance industry, followed by retail. But I think it's fair to say, in general, we saw broad-based strength across all verticals, maybe specifically to election-related ad spend. We had a slight tailwind from election-related ad spend in the third quarter, which was a little bit more pronounced in YouTube ads.
Operator: And our last question comes from Stephen Ju with UBS. Your line is now open. |
2,546 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Operator: And our last question comes from Stephen Ju with UBS. Your line is now open.
Stephen Ju: Thank you so much. Hi, Sundar. I think in two separate blog posts from Google Cloud, talking about the real-life use cases for GenAI, I think you highlighted what was a pretty material increase in a number of companies that are starting to turn their, I guess, ideas into products. I think it was like an 80% increase in the 6-month period. And I think you guys also published some survey data saying that your customers are generating tangible ROI there. So can you update us on what you're seeing in terms of sales cycles, perhaps accelerating? And how much of the heavy lifting the cloud team may have to do to help your customers turn those ideas into reality more quickly? And Philipp, I think one of the feedbacks that we're getting from advertisers is that while the initial use case for PMax for them was in search, they're starting to use it more and more for mid and upper funnel campaigns and budgets as well. So can you talk about whether that's an anecdote or something that you're already seeing perpetuate among all of your advertisers? Thank you. |
2,547 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: On the cloud side, look, I think you - sorry, on the cloud side, look, I do think you hinted in your question itself. Definitely, customers are leaning in this moment, wherever we have been working, we are definitely seeing real concrete proof points delivering real impact, right, be it in their user experience, be it in the bottom line, et cetera. And so I gave a few examples on my remarks. And I think customers are getting savvier. We ourselves are going through a lot of learnings, both in deploying this within Google as an enterprise and bringing those learnings to our customers outside. And as we see common patterns across the breadth of sectors we serve in, I think we are bringing those learnings. So I would say, if anything, I think over time, I think organizations are beginning to understand more. They are leaning in. Our models are getting better. We are building more comprehensive solutions on top of it. So I think we are well set up for 2025, and I think there will be continued momentum in this area.
Philipp Schindler: And on the PMax side, look, we continue to see success with PMax. And we see those success stories really from large advertisers, from agencies, from SMBs across marketing objectives, across different verticals. It's very cost effective, and it really finds customers wherever they are across all the different Google channels. And with the introduction of Gemini, we added a lot of new features to PMax. For example, to deliver more powerful performance, help advertisers scale, build high-quality creative assets and so on. But going directly to your question on the funnel, also keep in mind, we have a great product with Demand Gen that is all about inspiring consumers beyond the initial awareness and to take action. And we think Demand Gen is actually a very powerful tool to win in today's marketplace with marketers, and we can't wait to see actually what more value it will drive.
Stephen Ju: Thank you. |
2,548 | GOOGL | 3 | 2,024 | 2024-10-29 16:30:00 | Alphabet Inc. | 29,096 | Stephen Ju: Thank you.
Operator: Thank you. And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks.
Jim Friedland: Thanks, everyone, for joining us today. We look forward to speaking with you again on our fourth quarter 2024 call. Thank you, and have a good evening.
Operator: Thank you, everyone. This concludes today's conference call. Thank you for participating. You may now disconnect. |
2,549 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Operator: Welcome, everyone. Thank you for standing by for the Alphabet Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead.
Jim Friedland : Thank you. Good afternoon everyone and welcome to Alphabet's Second Quarter 2024 Earnings Conference Call. With us today are Sundar Pichai, Philipp Schindler, and Ruth Porat. Now, I'll quickly cover the Safe Harbor. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. And now I'll turn the call over to Sundar. |
2,550 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai : Thank you, Jim. And hello, everyone. I'm really pleased with our results this quarter. They showed tremendous ongoing momentum in Search and great progress in Cloud with our AI initiatives driving new growth. Search had another excellent quarter. And in terms of product innovation, we are seeing great progress with AI overviews. In Q2, Cloud reached some major milestones. Quarterly revenues crossed the $10 billion mark for the first time, at the same time pass the $1 billion mark in quarterly operating profit. Year-to-date, our AI infrastructure and generative AI solutions for Cloud customers have already generated billions in revenues and are being used by more than 2 million developers. As I spoke about last quarter, we are uniquely well-positioned for the AI opportunity ahead. Our Research and Infrastructure leadership means, we can pursue an in-house strategy that enables our product teams to move quickly. Combined with our model building expertise, we are in a strong position to control our destiny, as the technology continues to evolve. Importantly, we are innovating at every layer of the AI stack, from chips to agents and beyond, a huge strength. We are committed to this leadership long-term. This was underscored by the announcements we made at I/O, Cloud Next, and Google Marketing Live, and we'll touch on many of them here. Today, I'll start with Search, then move to our AI momentum more generally, followed by Cloud, YouTube, and some closing thoughts. Let's dive in. Over the past 25 years, we have continued to reimagine and expand Google Search across many technological shifts. With AI, we are delivering better responses on more types of search queries and introducing new ways to search. We are pleased to see the positive trends from our testing continue as we roll out AI overviews, including increases in search usage, and increased user satisfaction with the results. People who are looking for help with complex topics are engaging more and keep coming back for AI overviews. And we see |
2,551 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | People who are looking for help with complex topics are engaging more and keep coming back for AI overviews. And we see even higher engagement from younger users, aged 18 to 24, when they use search with AI overviews. As we have said, we are continuing to prioritize approaches that send traffic to sites across the web. And we are seeing that ads appearing either above or below AI overviews, continue to provide valuable options for people to take action and connect with businesses. Beyond AI overviews, AI expands the types of queries we are able to address and opens up powerful new ways to search. Visual search via Lens is one. Soon you'll be able to ask questions by taking a video with Lens. And already we have seen that AI overviews in Lens, leads to an increase in overall visual search usage. Another example is Circle to Search, which is available today on more than 100 million Android devices. We are seeing tremendous momentum from our AI investments. More than 1.5 million developers are now using Gemini across our developer tools. And we recently unveiled new models that are more capable and efficient than ever. Gemini now comes in 4 sizes, with each model designed for its own set of use cases. It's a versatile model family that runs efficiently on everything from data centers to devices. At 2 million tokens, we offer the longest context window of any large-scale foundation model to-date, which powers developer use cases that no other model can handle. Gemini is making Google's own products better. All six of our products with more than 2 billion monthly users now use Gemini. This means that Google is the company that's truly bringing AI to everyone. Gemini is powering incredibly helpful features in search, workspace, Google messages, and more. At I/O, we showed new features coming soon to Gmail and to Google Photos. Soon you'll be able to ask photos questions like, what did I eat at that restaurant in Paris last year? For a glimpse of the future, I hope you saw Project Astra at I/O. It shows multimodal |
2,552 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | at that restaurant in Paris last year? For a glimpse of the future, I hope you saw Project Astra at I/O. It shows multimodal understanding and natural conversational capabilities. We've always wanted to build a universal agent and it's an early look at how they can be helpful in daily life. Our AI product advances come from our long-standing foundation of research leadership, as well as our global network of infrastructure. In Q2, we announced our first data center and cloud region in Malaysia, and expansion projects in Iowa, Virginia, and Ohio. Our TPUs are a key bet here, too. Trillium is the sixth generation of our custom AI accelerator, and it's our best performing and most energy efficient TPU to-date. It achieves a near 5 times increase in peak compute performance per chip and a 67% more energy efficient compared to TPU v5e. And the latest Nvidia Blackwell platform, will be coming to Google Cloud in early 2025. We continue to invest in designing and building robust and efficient infrastructure to support our efforts in AI, given the many opportunities we see ahead. Of course, as we do this, we'll continue to create capacity by allocating resources towards our highest priorities. We are relentlessly driving efficiencies in our AI models. For example, over the past quarter, we have made quality improvements that include doubling the core model size for AI overviews, while at the same time improving latency and keeping cost per AI overviews served flat. And we are focused on matching the right model size to the complexity of the query in order to minimize impact on cost and latency. Separately on our real estate investments, we are taking a measured approach to match the current and future needs of our hybrid workforce, as well as our local communities. Next, Google Cloud. We continue to see strong customer interest, winning leading brands like Hitachi, Motorola Mobility, and KPMG. Our deep partnership with Oracle significantly expanded our joint offerings to the large customer base. Our momentum begins with |
2,553 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | deep partnership with Oracle significantly expanded our joint offerings to the large customer base. Our momentum begins with our AI infrastructure, which provides AI startups like Essential AI, with leading cost performance for models and high-performance computing applications. We continue to drive fundamental differentiation with new advances since Cloud Next. This includes Trillium, which I mentioned earlier, and A3 Mega powered by Nvidia H100 GPUs, which doubles the networking bandwidth of A3. Our enterprise AI platform, Vertex, helps customers such as Deutsche Bank, Kingfisher, and the US Air Force build powerful AI agents. Last month, we announced a number of new advances. Uber and WPP are using Gemini Pro 1.5 and Gemini Flash 1.5 in areas like customer experience and marketing. We broaden support for third-party models, including Anthropic's Claude 3.5 Sonnet and open source models like Gemma 2, Llama and Mistral. We are the only cloud provider to offer grounding with Google Search, and we are expanding grounding capabilities with Moody's, MSCI, ZoomInfo, and more. Our AI-powered applications portfolio is helping us win new customers and drive upsell. For example, our conversational AI platform is helping customers like Best Buy and Gordon Food Service. Gemini for Workspace helps click therapeutics analyze patient feedback as they build targeted digital treatments. Our AI-powered agents are also helping customers develop better quality software, find insights from their data, and protect their organization against cybersecurity threats using Gemini. Software engineers at Wipro are using Gemini code assist to develop, test, and document software faster. And data analysts at Mercado Libre are using BigQuery and Looker to optimize capacity planning and fulfill shipments faster. Cyber security risks continue to accelerate and the number of breaches continue to grow, something we all see in the news every day and that our [Mandiant teams] (ph) help manage. Our strong track record of uptime, quality control and |
2,554 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | in the news every day and that our [Mandiant teams] (ph) help manage. Our strong track record of uptime, quality control and reliability made Google Cloud the trusted security choice for organizations like Fiserv and Marriott International. In Q2, we infused AI throughout our security portfolio, helping TELUS strengthen its proactive security posture. Turning next to YouTube, YouTube is focused on a clear strategy, connecting creators with a massive audience and enabling them to build successful businesses through ads and subscriptions, while helping advertisers reach their desired audience. We had a great brand cast this quarter, and Philip will say more. I'm pleased at the progress here. YouTube has remained number one in US Streaming watch time, according to Nielsen. Views of YouTube shots on connected TVs more than double last year. And we are making it easier for creators to add captions and turn regular videos into shots. Next, on Android and Pixel. We joined Samsung for their Galaxy Unpacked event a few weeks ago, and we shared that Samsung's new devices will include the latest AI-powered Google updates on Android. It was a great event. I'm looking forward to our Made by Google event happening in August. We'll have lots to share around Android and the Pixel portfolio of devices. Our Pixel line is doing well. We recently introduced the new Pixel 8a, powered by our latest Google Tensor G3 chip. It provides beautiful AI experiences like Circle to Search, Best Take, and a Gemini-powered AI assistant. In other bets, I'm really pleased with the progress Waymo's making, a real leader in the space and getting rave reviews from users. Waymo's served more than 2 million trips to-date and driven more than 20 million fully autonomous miles on public roads. Waymo's now delivering well over 50, 000 weekly paid public rides, primarily in San Francisco and Phoenix. And in June, we removed the waitlist in San Francisco, so anyone can take a ride. Fully autonomous testing is underway in other Bay Area locations without a |
2,555 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | in San Francisco, so anyone can take a ride. Fully autonomous testing is underway in other Bay Area locations without a human in the driver's seat. Before I close, I want to acknowledge that today is Ruth's final earnings call. Let me take a moment to thank her for all she has done for Google and Alphabet as our longest-serving CFO. I'm excited to continue to work with her in her new role. And I look forward to welcoming our newly appointed CFO, Anat Ashkenazi. She starts next week, and you'll hear from her on our call next quarter. Thanks as always to our employees and partners everywhere for a great Q2. With that, over to you, Philip. |
2,556 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Philipp Schindler : Thanks, Sundar, and hello, everyone. Starting with performance, Google Services delivered revenues of $73.9 billion for the quarter, up 12% year-on-year. Search and other revenues grew 14% year-on-year, led by growth in the retail vertical, followed by financial services. YouTube ads revenues were up 13% year-on-year driven by growth and brand as well as direct response. Network revenues declined 5% year-on-year. In subscriptions, platforms, and devices, year-on-year revenues increased 14%, driven again by strong growth in YouTube subscriptions. For the rest of my remarks, I want to double click on two topics. First, how we're applying AI across the marketing process to deliver an even stronger ads experience. Second, YouTube's position as the leading multi-format platform. So let me start by sharing some of the ways we are applying AI to bring more performance benefits to even more businesses. Q2 brought several major opportunities to meet and learn from users, developers, creators, and customers. From I/O to Brandcast, Google Marketing Live and Can, a growing number of our customers and partners are looking to understand how to successfully incorporate AI into their businesses. This quarter, we announced over 30 new ads features, and products to help advertisers leverage AI and keep pace with the evolving expectations of customers and users. Across Search, PMax, DemandGen, and Retail, we're applying AI to streamline workflows, enhance creative asset production, and provide more engaging experiences for consumers. Listening to our customers, retailers in particular have welcomed AI-powered features to help scale the depth and breadth of their assets. For example, as part of a new and easier-to-use merchant center, we've expanded Product Studio, with tools that bring the power of Google AI to every business owner. You can upload a product image from the AI with something like, feature this product with Paris skyline in the background and Product Studio will generate campaign ready assets. I |
2,557 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | like, feature this product with Paris skyline in the background and Product Studio will generate campaign ready assets. I also hear great feedback from our customers on many of our other new AI-powered features. We're beta testing, virtual try on and shopping ads and plan to roll it out widely later this year. Feedback shows this feature gets 60% more high-quality views than other images and a higher click-out to retailer sites. Retailers love it because it drives purchasing decisions and fewer returns. Our AI-driven profit optimization tools have been expanded to performance max and standard shopping campaigns. Advertisers use profit optimization and smart bidding see a 15% uplift in profit on average compared to revenue-only bidding. Lastly, DemandGen is rolling out to Display in Video 360 and Search Ads 360 in the coming months with new generative image tools that create stunning high-quality image assets for social marketers. As we said at GML, when paired with Search or PMax, DemandGen delivers an average of 14% more conversions. The use cases we're seeing across the industry show the incredible potential of these AI-enabled products to improve performance. Let me briefly share two examples with you. Luxury jewelry retailer Tiffany leveraged DemandGen during the holiday season and saw 2.5% brand lift in consideration and actions, such as adding items to cards and booking appointments. The campaign drove a 5.6 times more efficient cost per click compared to social media benchmarks. Our own Google marketing team used DemandGen to create nearly 4,500 ad variations for a Pixel 8 campaign shown across YouTube, Discover, and Gmail, delivering twice the click-through rate at nearly a quarter of the cost. In addition to strengthening our ads products for customers, we continue to evolve our existing systems and products with improved models delivering further performance gains. In just six months, AI-driven improvements to quality, relevance, and language understanding have improved Broad Match performance by 10% |
2,558 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | months, AI-driven improvements to quality, relevance, and language understanding have improved Broad Match performance by 10% for advertisers using Smart Bidding. Also, advertisers who adopt PMax to Broad Match and Smart Bidding in their Search campaigns, see an average increase of over 25% more conversions or value at a similar cost. We'll continue to listen to our customers and use their feedback to drive innovation across our products. As you can hear, I continue to be excited about the AI era for ads. Now let's turn to YouTube. I've talked before about our approach to making YouTube the best place to create, watch and monetize. First, the best place to create. What sets YouTube apart from every other platform are the creators and the connection they have with their fans. Audiences tuning in to watch their favorite creators continue to grow. For example, two weeks ago, Mr. Beast's channel hit more than 300 million subscribers. Next, the best place to watch. Our long-term investment in CTV continues to deliver. Views on CTV have increased more than 130% in the last three years. According to Nielsen, YouTube is the Number #1 most watched streaming platform on TV screens in the US for the 17th consecutive month. Zooming out, when you look not just at streaming, but at all media companies and their combined TV viewership, YouTube is the second most watched after Disney. And this growth is happening in multiple verticals, including sports, which has seen CTV watch time on YouTube grow 30% year-over-year. Lastly, the best place to monetize. CTV on YouTube is continuing to benefit from a combination of strong watch time growth, viewer and advertiser innovation and a shift in brand advertising budgets from linear TV to YouTube. Our largest advertisers across verticals, including retail, entertainment, telco and home and personal care, are partnering with creators on ads and organic integrations. Verizon, for example, worked with a YouTube creator and Verizon customer to show them many ways that plans and offerings |
2,559 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Verizon, for example, worked with a YouTube creator and Verizon customer to show them many ways that plans and offerings can be customized to fit people’s lives. Using AI-powered formats, they created sketches in multiple lengths and orientations to serve the right creative to the right viewer and drive people to their site. Verizon's creator ads had a 15% lower CPA and a 38% higher conversion rate versus other ads. Turning to Shorts. Last quarter, I shared that in the US, the monetization rate of YouTube Shorts relative to in-stream viewing is showing a healthy rate of growth. Again, this quarter, we continue to see an improvement in Shorts monetization, particularly in the US. We are also seeing a very encouraging contribution from brand advertising on Shorts, which we launched on the product in Q4 last year. Lastly, a few words on shopping. Last year, viewers watched 30 billion hours of shopping-related videos, and we saw a 25% increase in watch time for videos that help people shop. While it is early days, shopping remains a key area of investment. At GML, we rolled out several product updates to YouTube shopping, helping creators sell products to their viewers. These updates included; product tagging where creators can tag products in their videos for viewers to discover and purchase, product collections and a new affiliate hub, a one-stop shop for creators to find deals and promotional offers from brands and track their affiliate earnings. With that, I'll finish by saying a huge thank you to Google's everywhere for their extraordinary commitment and to our customers and partners for their continued collaboration and trust. And Ruth, thanks for your amazing leadership and partnership over all these years. Now for one last time, it's over to you. |
2,560 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Ruth Porat : Thank you, Philipp, and thanks, Sundar, for those kind words. We had another strong quarter, driven in particular by performance in Search and Cloud, as well as the ongoing efforts to durably reengineer our cost base. My comments will be on year-over-year comparisons for the second quarter unless I state otherwise. I will start with results at the Alphabet level followed by segment results and conclude with our outlook. For the second quarter, our consolidated revenues were $84.7 billion, up 14% or up 15% in constant currency. Search remained the largest contributor to revenue growth. In terms of expenses, total cost of revenues was $35.5 billion, up 11%. Other cost of revenues was $22.1 billion, up 14%, with the increase driven primarily by content acquisition costs, followed by depreciation as well as the impact of the Canadian digital services tax, which was applied retroactively. Operating expenses were $21.8 billion up 5%, primarily reflecting an increase in R&D partially offset by a decline in G&A with sales and marketing essentially flat to the second quarter last year. The increase in R&D was driven primarily by compensation which was affected by lapping a reduction in valuation-based compensation liabilities in certain other bets in the second quarter last year followed by depreciation. The largest single factor in the year-on-year decline in G&A expenses was lower charges related to legal matters. Operating income was $27.4 billion, up 26% and our operating margin was 32%. Net income was $23.6 billion and EPS was $1.89. We delivered free cash flow of $13.5 billion in the second quarter and $60.8 billion for the trailing 12 months. As a reminder, last year, we had a timing benefit in the second and third quarters from a $10.5 billion deferred cash tax payment made in the fourth quarter, which depressed reported free cash flow growth this quarter, and we'll do so again next quarter. We ended the quarter with $101 billion in cash and marketable securities. Turning to segment results. Within |
2,561 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | next quarter. We ended the quarter with $101 billion in cash and marketable securities. Turning to segment results. Within Google Services, revenues were $73.9 billion, up 12%. Google Search and other advertising revenues of $48.5 billion in the quarter were up 14%, led again by growth in retail, followed by the financial services vertical. YouTube advertising revenues of $8.7 billion were up 13% driven by brand followed by direct response advertising. Network advertising revenues of $7.4 billion were down 5%. Subscription platforms and devices revenues were $9.3 billion up 14%, primarily reflecting growth in YouTube subscription revenues. TAC was $13.4 billion, up 7%. Google Services operating income was $29.7 billion up 27% and the operating margin was 40%. Turning to the Google Cloud segment. Revenues were $10.3 billion for the quarter, up 29%, reflecting first significant growth in GCP, which was above growth for cloud overall and includes an increasing contribution from AI. And second, strong Google Workspace growth, primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $1.2 billion and an operating margin of 11%. As to our Other Bets for the second quarter, revenues were $365 million and the operating loss was $1.1 billion. Turning to our outlook for the business. With respect to Google Services, First, within advertising. The strong performance of search was broad-based across verticals. In YouTube, we are pleased with the growth in the quarter. We had healthy watch time growth continued to close the monetization gap in Shorts and had continued momentum in Connected TV, with brand benefiting in part from an ongoing shift in budgets from linear television to digital. As we look forward to the third quarter, we will be lapping the increasing strength in advertising revenues in the second half of 2023, in part from APAC based retailers. Turning to subscriptions, platforms and devices. First, we continue to have significant growth in our subscriptions business |
2,562 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Turning to subscriptions, platforms and devices. First, we continue to have significant growth in our subscriptions business which drives the majority of revenue growth in this line. However, there was a sequential decline in the year-on-year growth rate, as we anniversaried the impact of a price increase for YouTubeTV in the second quarter last year. The impact will persist through the balance of the year. Second, with regard to platforms. We are pleased with the performance in play driven by an increase in buyers. Finally, with respect to devices. The most important point as we look forward is that our Made by Google launches have been pulled forward into the third quarter from the fourth quarter last year benefiting revenues in Q3 this year. Turning to cloud, which continued to deliver very strong results. For the first time, Cloud crossed $10 billion in quarterly revenues and $1 billion in quarterly operating profit. As Sundar noted year-to-date, our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than 2 million developers. We're particularly encouraged that the majority of our top 100 customers are already using our generative AI solutions. We continue to invest aggressively in the business. Turning to margins. The margin expansion in Q2 versus last year reflects our ongoing efforts to durably reengineer our cost base, as well as revenue strength. Our leadership team remains focused on our efforts to moderate the pace of expense growth in order to create capacity for the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure. Once again headcount declined quarter-on-quarter, which reflects both actions we have taken in the first half of the year and a much slower pace of hiring. Looking ahead, we expect a slight increase in headcount in the third quarter, as we bring on new graduates. As we have discussed previously, we’re continuing to invest in top |
2,563 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | in the third quarter, as we bring on new graduates. As we have discussed previously, we’re continuing to invest in top engineering and technical talent, particularly in cloud and technical infrastructure. Looking forward, we continue to expect to deliver full-year 2024 Alphabet operating margin expansion relative to 2023. However, in the third quarter operating margins will reflect the impact of both the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure, as well as the increase in cost of revenues due to the pull-forward of hardware launches into Q3. With respect to CapEx, our reported CapEx in the second quarter was $13 billion, once again driven overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers. Looking ahead, we continue to expect quarterly CapEx throughout the year to be roughly at or above the Q1 CapEx of $12 billion keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. With regard to other bets, we continue to focus on improving overall efficiencies, as we invest for long-term returns. Waymo is an important example of this, with its technical leadership coupled with progress on operational performance. As you will see in the 10-Q, we have chosen to commit to a new multi-year investment of $5 billion. This new round of funding, which is consistent with recent annual investment levels will enable Waymo to continue to build the world's leading autonomous driving technology company. To close, this is my 56th and last earnings call, 37 of them at Alphabet. So I have a few closing thoughts of gratitude. I've been so proud to be at Google and Alphabet as CFO and to work with some of the smartest people in the world every day. I think, we have accomplished a lot in the last nine plus years, and I am confident that progress will continue. Of course, I'm not going far and I'm honored to have my new role, which I've been slowly |
2,564 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | confident that progress will continue. Of course, I'm not going far and I'm honored to have my new role, which I've been slowly working my way into during the past 11 months and I look forward to continuing to work with Sundar, and our great team. Being CFO of one of the most important companies in the world has been the opportunity and responsibility of a lifetime. Google's Mission of advancing technology and bringing information to people throughout the world is as relevant today as it was when I worked on its IPO. Technology has been a catalyst for economic growth throughout human history. The people on this call know that if a technological advancement is not the focus of every business and government, they will be left behind. Underpinning this is the need for sound and responsible investment. That has never been more important than today and certainly, that is Google and Alphabet's focus. I want to end by thanking Googlers around the world for the innovation and commitment that has enabled us to deliver such extraordinary products and services globally. I also want to thank our investors and analysts for your long-term support and your feedback. Thank you. Sundar, Philipp and I will now take your questions. |
2,565 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Operator: Thank you. [Operator Instructions] Your first question comes from Brian Nowak with Morgan Stanley. Your line is now open.
Brian Nowak: Thanks for taking my questions. First, thank you Ruth for all the help and significant impact over the past decade. The first one, it is a little bit of a jump ball, I guess for Sundar, Philipp or Ruth. I guess we're sort of 18 months this fever pitch around the GenAI focus in the world. Maybe from any of your perspective, can you just sort of talk to us about areas where you've seen faster than expected traction or testing adoption of some of the AI, generative AI capabilities versus slower than expected traction and testing from a Google perspective. And then, Ruth I appreciate all the comments about structurally reengineering the OpEx base. Are there any more tangible examples of areas you can talk to us about where you still see further ways to drive more efficiency across the company. Thanks. |
2,566 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Brian, thanks. I'll take the first part. I think it's a good question. Obviously, I think there is a time curve in terms of taking the underlying technology and translating it into meaningful solutions across the Board, both on the consumer and the enterprise side. Definitely, on the consumer side, I'm pleased, as I said in my comments earlier in terms of how for a product like Search, which is used at that scale over many decades. How we've been able to introduce it in a way that it's additive and enhances the overall experience and this positively contributing there. I think across our consumer products, we've been able -- I think we are seeing progress on the organic side. Obviously monetization is something that we would have to earn on top of it. The enterprise side, I think we are at a stage where definitely there are a lot of models. I think roughly, the models are all kind of converging towards a set of base capabilities. But I think where the next wave is, working to build solutions on top of it. And I think there are pockets, be it coding, be it in customer service, et cetera, where we are seeing some of those use cases seeing traction, but I still think there is hard work there to completely unlock those. |
2,567 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Ruth Porat: And on your second question first, thank you for your comments. Look, the reason we've consistently used the term, the phrase that we're focused on durably reengineering our cost base is because these are deep work streams. They are not tactical fixes, and we continue to build on them. And so the main areas that we've talked about are around product and process prioritization around organizational efficiency and structure. Both of those are reflected in the headcount and the fact that headcount is down year-on-year. And across all of those -- as I said, across our entire leadership team, we remain focused on continuing to execute against them. So in terms of the most recent examples, as we talked about last quarter with the combination of the devices and services product area with the platforms and ecosystems product area, we announced that back in April. And what we discussed last quarter and what we're seeing is that unifying teams across these organizations, helps with product execution and what we're really focused on is really adding to velocity and efficiency. So kind of the gift that keeps giving. And then more broadly, all of the work streams that we've talked to you about before, we continue to remain focused on. A big one, very important one, is all of the efficiency efforts, the work streams around technical infrastructure and improving efficiency there. We are also working on the use of AI across Alphabet. We are working on continuing to build on what we've done with our centralized procurement organization. We are continuing to optimize our real estate portfolio. And so again this is across our leadership team. These are efforts that all build to this phrase durably reengineering our cost base.
Brian Nowak: Great. Thank you both.
Operator: Our next question comes from Doug Anmuth with JPMorgan. Your line is now open. |
2,568 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Brian Nowak: Great. Thank you both.
Operator: Our next question comes from Doug Anmuth with JPMorgan. Your line is now open.
Doug Anmuth: Thanks for taking my questions. One for Ruth and one for Sundar. Ruth you've now had Google Services operating margins roughly 40% for the past two quarters. Just as you create more capacity to help offset the future investments, is it reasonable to think that you could sustain at those kind of levels going forward? And then, Sundar just as it relates to AI overviews, you talked about the positive trends there. Can you just help us understand where you are, how far along in rolling-out AI overviews and then any more color around kind of click-through rates and monetization levels relative to your traditional searches. Thanks.
Ruth Porat: So in terms of the Google services operating margin, it did reflect all the work that we are doing on durably reengineering the cost base. It also reflected the benefit of strong revenue performance in search. And so what I tried to lay out in the comments, as we look forward to the third quarter is operating margins will reflect the increases in depreciation and expenses associated with higher levels of our investment in technical infrastructure. It will also reflect higher expenses associated with the Pixel launch, due to the pull forward. So those are important factors. I would say, overall company-wide, it is important to note that we do expect to continue to deliver full year '24 Alphabet operating margin expansion relative to 2023, but I did want to highlight those important points as we look forward to Q3. |
2,569 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: And Doug, thanks. On the AI overview, we are -- we have rolled it out in the US and we are -- will be through the course of the year, definitely scaling it up both to more countries. And also, we have taken a conservative start focused on quality, making sure the metrics are healthy and so on, but you will see us expand the use cases around it, and we'll touch definitely more queries. All the feedbacks we have seen are positive. And on the monetization side, I think Philipp has touched upon it. Maybe Philipp, anything more you want to add there?
Philipp Schindler: Yes, look, innovation and improvements to the user experience on search have historically opened up new opportunities for advertisers. We talked about this before we saw this when we navigated from desktop to mobile for example. And we can see GenAI obviously expand the types of questions we can help people with, as Sundar mentioned. And as we said before, people are finding ads either above or below AI overviews helpful. We have a solid baseline here from which we can innovate and as you have probably noticed at GML, we announced that soon we'll actually start testing Search and Shopping ads in AI overviews for users in the US, and they will have the opportunity to actually appear within the overview in a section clearly labeled as sponsored, when they're relevant to both the query and the information in the AI overview, really giving us the ability to innovate here and take this to the next level.
Doug Anmuth: Thank you. Best of luck, Ruth, in your new role.
Ruth Porat: Thank you.
Operator: Our next question comes from Michael Nathanson with Moffett. Please go ahead. |
2,570 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Ruth Porat: Thank you.
Operator: Our next question comes from Michael Nathanson with Moffett. Please go ahead.
Michael Nathanson: Thanks. I have two, one for Sundar and one for Philipp. Sundar, on decision this week to not deprecate cookies. I know it's been a long journey. Can you talk a bit about what we should expect in terms of new experience in Chrome and why the company makes a decision not to go down the path on deprecating cookies. And then Philipp, I know it's only one quarter, but it's interesting that Search is growing faster than YouTube, which surprised some of us. But can you talk about what factors you think are kind of differences in growth rates between these markets? And is there anything on the AI front that you could see maybe reaccelerating YouTube growth, as you've seen happen with Search. Thanks so much.
Sundar Pichai: And Michael on cookies, Look I think, obviously we are super committed to improving privacy for users in chrome and there was the whole focus around privacy sandbox and we remain committed on the journey, but on third-party cookies, given the implications across the ecosystems and considerations and feedback across so many stakeholders. We now believe user choice is the best path forward there and we'll both improve privacy by giving users choice and we'll continue our investments in privacy enhancing technologies, but it is obviously an area we will be taking feedback from the players in the ecosystem and we are committed to being privacy first as well.
Philipp Schindler: And on the second part of your question, maybe Ruth, you want to jump in first and then I take the rest if needed. |
2,571 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Ruth Porat: Absolutely. So Look, as we both noted, search revenues really reflected broad based growth across verticals. That was led by retail followed by financial services. I think your question really goes to the heart of the year-on-year growth comparison. And as both Philipp and I noted, we are really pleased with YouTube, the YouTube team all that was done, it was driven by brand followed by direct response, and they have very strong ongoing operating metrics, which Philipp will comment on. I think the important point to note, and I tried to tease out in opening comments, was that the deceleration in this year-on-year revenue growth for the second quarter versus the first quarter, primarily reflected the tougher comparison versus the first quarter because at that point, as you probably recall, YouTube was lapping negative year-on-year growth in Q1 last year. And then also Q1 benefited from the extra from leap year. And so what you are also seeing here is with YouTube, we were [anniversaring] (ph) the ramp in APAC based retailers that began in the second quarter last year and foreign exchange headwinds as well that we noted. And so it's -- there are some timing issues going on. And what we are trying to highlight is the underlying operating strength. Back to you, Philipp.
Philipp Schindler: Yes, that was very comprehensive. Nothing really to add from my side here.
Sundar Pichai: The only thing I would say, adding to Brian's first question on areas where things are maybe taking longer. I think, look we are all building multimodal models. At least Gemini has been natively multimodal from the ground up. But most of the use cases today that have been unlocked have been around the tech side. So in terms of getting real generative audio, video experience is working well. I think there is still – it is going to take some time. But over time, obviously it will be deeply relevant to YouTube and so it's an area I'm excited about in the future.
Michael Nathanson: Okay. Thanks a lot. And best to you. Thanks. |
2,572 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Michael Nathanson: Okay. Thanks a lot. And best to you. Thanks.
Operator: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open.
Eric Sheridan: Thanks so much. And I'll echo the thanks for Ruth, for all the insights and partnership over the years on these earnings calls. Sundar maybe first for you, in terms of Cloud and bringing AI to the enterprise, I wanted to know if you go a little bit deeper in terms of how you are seeing AI actually get adopted implemented, what it potentially could mean for the strategic positioning of the cloud business and the potential for AI workloads to be a stimulant to revenue growth for Cloud first. And then following up the last set of questions on YouTube are really about the macro or the ad environment. What do you guys, as a team, continue to learn about the subscription side of YouTube and the appetite for consumers to engage with a broader array of media products at the subscription layer. Thanks. |
2,573 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks Eric. Look, on the Cloud and AI stuff, obviously, it is something which I think will end up being a big driver over time. I mentioned in my opening remarks, already if you take a look at our AI infrastructure and generative AI solutions for cloud across everything we do, be it compute on the AI side, the products we have through Vertex AI, Gemini for Workspace and Gemini for Google Cloud, et cetera, we definitely are seeing traction. People are deeply engaging with Gemini models across Vertex and AI studio. We now have over 2 million developers playing around with these things, and you are definitely seeing early use cases. But I think we are in this phase, where we have to deeply work and make sure on these use cases, on these workflows. We are driving deeper progress on unlocking value, which I'm very bullish will happen, but these things take time. So -- but if I were to take a longer-term outlook, I definitely see a big opportunity here. And I think particularly for us, given the extent to which we are investing in AI, our research infrastructure leadership, all of that translates directly. And so I'm pretty excited about the opportunity space ahead. |
2,574 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Ruth Porat: And then on your second question with respect to subscriptions, I am implicit in your question, how strong is it, as I noted in opening comments, that overall line subscriptions platforms and devices delivered healthy growth and that was led by subscriptions. And as we've said on many calls here in a row, the subscription revenue growth continued to be quite strong. It was driven by subscriber growth in both YouTube TV and YouTube Music premium. And then the other component within that line is Google One that also delivered strong subscriber and revenue growth. I think the heart of your question is really around YouTube and that is the heart of the revenues in that line. So it continues to be very strong. We see a lot of take up in it, strong subscriber growth, really pleased with it. We did note that growth on that line decelerated due to anniversarying the YouTube TV price increase. But at the heart of it, our people interested in the subscription offerings and it’s the take of significant. We're really pleased with it.
Eric Sheridan: Thank you.
Operator: Our next question comes from Ross Sandler with Barclays. Your line is now open.
Ross Sandler: Hi, everybody. Just two questions on the AI CapEx. So it looks like from the outside at least, the hyperscaler industry is going from kind of an under bill situation this time last year to better meeting the demand with capacity right now to potentially being overbuilt next year if these CapEx growth rates keep up. So do you think that's a fair characterization? And how are we thinking about the return on invested capital with this AI CapEx cycle. And then related to that, do you think that the AI industry is close to or far away from hitting some kind of wall on foundation model improvement in AI training, based on like lack of availability of new data to train on. Just your thoughts on that would be great. Thank you. |
2,575 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks Ross. I think great questions. Look, I -- obviously, we are at an early stage of what I view as a very transformative area and in technology when you are going through these transitions, aggressively investing upfront in a defining category, particularly in an area in which in a leveraged way cuts across all our core areas our products, including Search, YouTube and other services, as well as fuels growth in Cloud and supports the innovative long-term Bets and Other Bets is definitely something for us makes sense to lean in. I think the one way I think about it is when we go through a curve like this, the risk of under-investing is dramatically greater than the risk of over-investing for us here, even in scenarios where if it turns out that we are over investing. We clearly -- these are infrastructure, which are widely useful for us. They have long useful lives and we can apply it across, and we can work through that. But I think not investing to be at the frontier, I think definitely has much more significant downside. Having said that, we obsess around every dollar we put in. Our teams are -- work super hard, I'm proud of the efficiency work, be it optimization of hardware, software, model deployment across our fleet. All of that is something we spend a lot of time on, and that's how we think about it. To your second question on whether -- how do the scaling loss hold. Are we hitting on some kind of wall or something? Look, I think we are all pushing very hard, and there is going to be a few efforts, which will scale up on the compute side and push the boundaries of these models. What I would tell is regardless of how that plays out, you still think there is enough optimizations we are all doing, which is driving constant progress in terms of the capabilities of the models. And more importantly, taking them and translating into real use cases across the consumer and enterprise side, I think on that frontier. I think there is still a lot of progress to be had. And so we are pretty focused |
2,576 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | and enterprise side, I think on that frontier. I think there is still a lot of progress to be had. And so we are pretty focused on that as well. |
2,577 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Ross Sandler: Thank you.
Operator: Our next question comes from Stephen Ju with UBS. Your line is now open.
Stephen Ju: Okay. Thank you so much. So Sundar, I guess to ask the AI question a different way. As we talk to some of the model builders out there, it looks like the initial use cases are more on the cost savings or efficiency side. But when do we -- when do you think we'll start thinking about products that can help revenue generation for the Fortune 500, Fortune 1000 companies, which is probably something that can hopefully create greater value over time versus just cutting costs? And Philipp, listening to what will be, I guess Ruth's final comments on Q2 on these public calls. And thank you, by the way Ruth, for all the help. I couldn't help but notice that the bigger factors were brand followed by direct response. And if we continue to think that the one you bring up first is the larger factor and tying this into your prior commentary about shopping being an important consideration. When do you think we'll start talking about direct response being a much bigger contributor to YouTube's growth versus brand? Thank you.
Sundar Pichai: On the first part of the question look I think the technology's horizontal enough, it can apply on both sides. If you take a use case like improving the customer service experience, it is part of it which is driving efficiencies, and you can look at it from a cost standpoint, but you could also be overall improving the experience, improving conversion, driving the funnel better. And so increasing basket size if you are a retail e-commerce player, et cetera. So we are seeing people experiment across both sides. And so I think, you will see it played across both sides. Philipp, on the second one? |
2,578 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Philipp Schindler: Yes. On the second one, look on the direct response side, as you know it is about driving and converting commercial intent and customers are obviously benefiting from including video in their AI-powered campaigns, it could be PMax, it could be DemandGen and obviously using our automated tools to enhance and create video creatives. And we are very, very optimistic about this path. On average advertisers who run both image and video ads with DemandGen campaigns see 6% more conversions per dollar than those running image only ads and discovery. And this is just one little example of how this can obviously boost your performance business. So that's a big part. The brand side, as you know Google AI continues to make it easier for brands to show up next to the content where viewers are obviously the most engaged. And they're finding it, as you can see from the numbers, a very effective way to drive awareness and consideration. And we are also quite excited about some of the recent launches on YouTube shopping side, if you want to put that into the direct response bucket.
Stephen Ju: Okay. Thank you.
Operator: And our last question comes from Justin Post with Bank of America. Your line is now open.
Justin Post: Great. I'll ask a couple of areas. First on the cloud acceleration, would you characterize that as new AI demand helping drive that year-to-date? Or is that more of a rebound in just general compute and other demand or is AI really moving this forward and helping drive acceleration. And then I wanted to ask about your internal cost savings which has been really strong. How are you using AI internally to help cut costs? Are you seeing better efficiencies with your engineers? And just would love to hear about how you are applying AI to cut your own costs? Thank you. |
2,579 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Ruth Porat: Great. Thank you for that. So overall we are -- as both Sundar and I said, we are very pleased with the results in Cloud. And there is clearly a benefit as the Cloud team is engaging broadly with customers around the globe with AI related solutions, AI infrastructure solutions and the generative-AI solutions. I think we noted that we're particularly encouraged that the majority of our top 100 customers are already using our generative AI solution. So it is clearly adding to strength of the business on top of all that they are doing. And just to be really clear, the results for GCP, the growth rate for GCP is above the growth for cloud overall. And then I'll turn it to Sundar on the cost saving point, but just one point we are really pleased as well that Cloud's margin improved as it did. And in part, that reflects the revenue strength that they delivered and all of the efficiency efforts that I've already spoken about. But looking ahead in Q3, we do expect the same seasonal pattern that you saw last year with respect to margin and we are continuing to invest in the business.
Sundar Pichai: Look, I think specifically, if the question is about engineers and coding, et cetera, we definitely want to be on the cutting edge there. I think, we are making these tools available to some of the most [line of] (ph) productive engineers and demanding engineers out there, and they are definitely kicking the tires hard. And -- but I would say, it's still all in very early stages. I think particularly when it comes to writing high-quality secure code, but I think all the learnings what we are gaining here will translate into our models and products, and that's the virtuous cycle, which I'm excited by. So there's a lot more to come.
Justin Post: Great, thank you.
Operator: Thank you. And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks. |
2,580 | GOOGL | 2 | 2,024 | 2024-07-23 16:30:00 | Alphabet Inc. | 29,096 | Jim Friedland: Thanks everyone for joining us today. We look forward to speaking with you again on our third quarter 2024 call. Thank you and have a good evening.
Operator: Thank you everyone. This concludes today's conference call. Thank you for participating. You may now disconnect. |
2,581 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Operator: Welcome, everyone. Thank you for standing by for the Alphabet First Quarter 2024 Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead.
James Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's First Quarter 2024 Earnings Conference Call. With us today are Sundar Pichai, Philipp Schindler, and Ruth Porat.
Now I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement.
During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise.
And now I'll turn the call over to Sundar.
Sundar Pichai: Thank you, Jim, and hello, everyone. It was a great quarter led by strong performance from Search, YouTube, and Cloud.
Today, I want to share how we are thinking about the business and the opportunity more broadly. Of course, that's heavily focused on AI and Search. Then I'll take you through some highlights from the quarter in Cloud, YouTube and beyond. |
2,582 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Let's discuss our momentum and strategy. Taking a step back, it took Google more than 15 years to reach $100 billion in annual revenue. In just the last 6 years, we have gone from $100 billion to more than $300 billion in annual revenue. Of course, Search continues to power that as you see in our Q1 results. But in addition, we expect YouTube overall and Cloud to exit 2024 at a combined annual run rate of over $100 billion. This shows our track record of investing in and building successful new growing businesses.
Now let's look at how well we are positioned for the next wave of AI innovation and the opportunity ahead. There are 6 points to make: one, research leadership; two, infrastructure leadership; three, innovation in Search; four, our global product footprint; five, velocity in execution; six, monetization paths.
First, our foundation of research leadership. We've been an AI-first company since 2016, pioneering many of the modern breakthroughs that power AI progress for us and for the industry. Last week, we further consolidated teams that build AI models under Google DeepMind. This will help simplify development and establish a single access point for our product teams as they build generative AI applications with these models. The teams are making rapid progress, developing Gemini and other models.
In February, we rolled out Gemini 1.5 Pro, which shows dramatic performance enhancements across a number of dimensions. It includes a breakthrough in long context understanding, achieving the longest context window of any large-scale foundation model yet. Combining this with Gemini's native multimodal understanding across audio, video, text code and more, it's highly capable. We are already seeing developers and enterprise customers enthusiastically embrace Gemini 1.5 and use it for a wide range of things. Beyond Gemini, we have built other useful models, including our Gemma open models as well as image and visual models and others. |
2,583 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Second, infrastructure leadership. We have the best infrastructure for the AI era. Building world-leading infrastructure is in our DNA, starting in our earliest days when we had to design purpose-built hardware to power Search. Our data centers are some of the most high-performing, secure, reliable, and efficient in the world. They've been purpose-built for training cutting-edge AI models and designed to achieve unprecedented improvements in efficiency. We have developed new AI models and algorithms that are more than 100x more efficient than they were 18 months ago.
Our custom TPUs, now in their fifth generation, are powering the next generation of ambitious AI projects. Gemini was trained on and is served using TPUs. We are committed to making the investments required to keep us at the leading edge in technical infrastructure. You can see that from the increases in our capital expenditures. This will fuel growth in Cloud, help us push the frontiers of AI models and enable innovation across our services, especially in Search.
AI innovations in Search are the third and perhaps the most important point I want to make. We have been through technology shifts before, to the web, to mobile, and even to voice technology. Each shift expanded what people can do with Search and led to new growth. We are seeing a similar shift happening now with generative AI. For nearly a year, we've been experimenting with SGE in search labs across a wide range of queries. And now we are starting to bring AI overviews to the main Search results page. We are being measured in how we do this, focusing on areas where gen AI can improve the search experience while also prioritizing traffic to websites and merchants. |
2,584 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | We have already served billions of queries with our generative AI features. It's enabling people to access new information, to ask questions in new ways and to ask more complex questions. Most notably, based on our testing, we are encouraged that we are seeing an increase in search usage among people who use the new AI overviews as well as increased user satisfaction with the results. And with Circle to Search, people can now circle what they see on their Android screens, ask a question about an image or object in a video and get an AI overview with Lens.
Fourth, our global product footprint beyond Search. We have 6 products with more than 2 billion monthly users, including 3 billion Android devices. 15 products have 0.5 billion users, and we operate across 100-plus countries. This gives us a lot of opportunities to bring helpful gen AI features and multimodal capabilities to people everywhere and improve their experiences. We have brought many new AI features to Pixel, Photos, Chrome, Messages and more. We are also pleased with the progress we are seeing with Gemini and Gemini Advanced through the Gemini app on Android and the Google app on iOS.
Fifth, improved velocity in execution. We've been really focused on simplifying our structures to help us move faster. In addition to bringing together our model-building teams under Google DeepMind, we recently unified our ML infrastructure and ML developer teams to enable faster decisions, smarter compute allocation, and a better customer experience.
Earlier this year, we brought our Search teams together under one leader. And last week, we took another step, bringing together our platforms and devices teams. The new combined team will focus on delivering high-quality products and experiences, bolstering the Android and Chrome ecosystems, and bringing our best innovations to partners faster. |
2,585 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | We also remain focused on long-term efforts to durably reengineer our cost base. You can see the impact of this work reflected in our operating margin improvement. We continue to manage our head count growth and align teams with our highest priority areas. This speeds up decision-making, reduces layers, and enables us to invest in the right areas.
Beyond our teams, we are very focused on our cost structures, procurement and efficiency. And a number of technical breakthroughs are enhancing machine speed and efficiency, including the new family of Gemini models and a new generation of TPUs. For example, since introducing SGE about a year ago, machine costs associated with SGE responses have decreased 80% from when first introduced in Labs driven by hardware, engineering, and technical breakthroughs. We remain committed to all of this work.
Finally, our monetization path. We have clear paths to AI monetization through Ads and Cloud as well as subscriptions. Philipp will talk more about new AI features that are helping advertisers, including bringing Gemini models into Performance Max. Our Cloud business continues to grow as we bring the best of Google AI to enterprise customers and organizations around the world. And Google One now has crossed 100 million paid subscribers, and in Q1, we introduced a new AI premium plan with Gemini Advanced.
Okay, those are the 6 points so now let me turn to quarterly highlights from Cloud and YouTube in a bit more detail. In Cloud, we have announced more than 1,000 new products and features over the past 8 months. At Google Cloud Next, more than 300 customers and partners spoke about their generative AI successes with Google Cloud, including global brands like Bayer, Cintas, Mercedes-Benz, Walmart and many more. |
2,586 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Our differentiation in Cloud begins with our AI hypercomputer, which provides efficient and cost-effective infrastructure to train and serve models. Today, more than 60% of funded gen AI start-ups and nearly 90% of gen AI unicorns are Google Cloud customers. And customers like PayPal and Kakao Brain are choosing our infrastructure. We offer an industry-leading portfolio of NVIDIA GPUs along with our TPUs. This includes TPU v5p, which is now generally available and NVIDIA's latest generation of Blackwell GPUs. We also announced Axion, our new Google design and Arm-based CPU. In benchmark testing, it has performed up to 50% better than comparable x86-based systems.
On top of our infrastructure, we offer more than 130 models, including our own models, open source models and third-party models. We made Gemini 1.5 Pro available to customers as well as Imagine 2.0 at Cloud Next. And we shared that more than 1 million developers are now using our generative AI across tools, including AI Studio and Vertex AI. We spoke about how customers like Bristol-Myers Squibb and Etsy can quickly and easily build agents and connect them to their existing systems. For example, Discover Financial has begun deploying gen AI-driven tools to its nearly 10,000 call center agents to achieve faster resolution times for customers. Customers can also now ground their gen AI with Google Search and their own data from their enterprise databases and applications.
In Workspace, we announced that organizations like Uber, Pepperdine University and PennyMac are using Gemini and Google Workspace, our AI-powered agent that's built right into Gmail, Docs sheets and more. We also announced Google Vids, a new application to create stories in short video format. And we introduced Gemini for Meetings and Messaging and Gemini Security for Workspace.
Customers are choosing Workspace because they have deep trust in our powerful security and privacy features. |
2,587 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Customers are choosing Workspace because they have deep trust in our powerful security and privacy features.
Our Cloud business is now widely seen as the leader in cybersecurity. I saw this firsthand when I went to the Munich Security Conference in February. Cybersecurity analysts are using Gemini to help spot threats, summarize intelligence and take action against attacks, helping companies like American Family Insurance aggregate and analyze security data in seconds instead of days.
Turning next to YouTube, which continues to grow and lead in streaming. We announced that on average, viewers are watching over 1 billion hours of YouTube content on TVs daily. AI experiments like Dream Screen will give anyone the ability to make AI-generated backgrounds for YouTube Shorts. And on subscriptions, which are increasingly important for YouTube, we announced that in Q1, YouTube surpassed 100 million Music and Premium subscribers globally, including trialers. And YouTube TV now has more than 8 million paid subscribers.
Finally, in Other Bets, Waymo's fully autonomous service continues to grow ridership in San Francisco and Phoenix with high customer satisfaction, and we started offering paid rides in Los Angeles and testing rider-only trips in Austin.
Overall, it was a great quarter, and there's more to come. IO is in less than 3 weeks, followed by Brandcast and Google Marketing Live.
I want to thank our employees around the world who are at the heart of this progress and who continue to focus on building innovative products, helpful services and new opportunities for businesses and partners around the world. Thank you. Philipp?
Philipp Schindler: Thanks, Sundar, and hi, everyone.
Google Services revenue of $70 billion were up 14% year-on-year. Search and other revenues grew 14% year-on-year led again by solid growth in the retail vertical with particular strength from APAC-based retailers, which began in the second quarter of 2023. |
2,588 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | YouTube Ads revenues were up 21% year-on-year driven by growth in both direct response and brand. Network revenues declined 1% year-on-year. In subscriptions, platforms and devices, year-on-year revenues increased 18%, driven again by strong growth in YouTube subscriptions.
Let's now talk about a few highlights from the quarter from a product innovation and advertising performance perspective.
First, it bears repeating that AI innovation across our Ads ecosystem is core to every aspect of our product portfolio, from targeting, bidding, creative, measurement, and across campaign types. We've talked about whole solutions like Smart Bidding use AI to predict future ad conversions and their value in helping businesses stay agile and responsive to rapid shifts in demand and how products like broad match leverage LLMs to match ads to relevant searches and help advertisers respond to what millions of people are searching for. This is foundational.
As advances accelerate in our underlying AI models, our ability to help businesses find users at speed and scale and drive ROI just keeps getting better. We're especially excited about the doors gen AI is opening for creative capabilities, helping deliver on the premise of getting the right ad to the right user in the right moment.
Look at Performance Max. In February, we rolled Gemini into PMax. It's helping curate and generate text and image assets so businesses can meet PMax asset requirements instantly. This is available to all U.S. advertisers and starting to roll out internationally in English, and early results are encouraging. Advertisers using PMax asset generation are 63% more likely to publish a campaign with good or excellent ad strength. And those who improve their PMX ad strength to excellent see 6% more conversions on average. |
2,589 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | We're also driving improved results for businesses opting into automatically created assets, which are supercharged with gen AI. Those adopting ACA see, on average, 5% more conversions at a similar cost per conversion in Search and Performance Max campaigns.
And then there's Dimension. Advertisers are loving its ability to engage new and existing customers and drive purchase consideration across our most immersive and visual touch points like YouTube, Shorts, Gmail and Discover.
Hollywood film and TV studio, Lionsgate, partnered with Horizon Media to test what campaign type will deliver the most ticketing page views for its The Hunger Games: Ballad of Songbirds and Snakes film. Over a 3-week test, demand gen was significantly more efficient versus social benchmarks with an 85% more efficient CPC and 96% more efficient cost per page view. Lionsgate has since rolled out demand gen for 2 new titles.
We're also bringing new creative features to demand gen. Earlier this month, we announced new generative image tools to help advertisers create high-quality assets in a few steps with a few simple prompts. This will be a win for up-leveling visual storytelling and testing creative concepts more efficiently.
And then there's obviously Search generative experience, which Sundar talked about. I laid out that innovation and the user experience on Search has historically opened up new opportunities for advertisers. We saw this when we successfully navigated from desktop to mobile. We're continuing to experiment with new ad formats, including search and shopping ads alongside search results in SGE. And we shared in March how folks are finding ads either above or below the SGE results helpful. We're excited to have a solid baseline to keep innovating on and confident in the role SGE, including Ads, will play in delighting users and expanding opportunities to meet user needs. |
2,590 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Which brings me to Search and our strong performance in the first quarter. In Q1, retail was again the top contributor. Our focus remains on driving profitability and growth for retailers, helping them optimize digital performance for both online and off-line as well as innovate across our shopping and merchant experiences.
Highlights include continued upsides for retailers, leading into agile budget and bidding strategies across Search, PMax, or both; take-home goods retailer IKEA, who leaned into Google's store sales measurement to understand its total omnichannel revenue opportunity across search. By measuring 2.3x more revenue and using value-based bidding solutions to bid to its omnichannel customers, IKEA drove a significant increase in omni revenue in Q1 and is now scaling this strategy globally. We also expanded local inventory ads into 23 countries, helping drive shopper confidence and off-line sales. Retailers can convert intent into action by showcasing in-store availability, pricing, pickup options and more all in one ad format.
Moving to YouTube. Last quarter, I went deep into our strategy. It all starts with creation, which drives viewership, which leads to monetization. A few updates to build on Sundar's remarks.
First, creation, which is all about giving creators the tools to create amazing content, grow their audiences and build their businesses. In 2023, more people created content on YouTube than ever before, and the number of channels uploading Shorts year-on-year grew 50%. We also hit a new milestone with 3 million-plus channels in our YouTube Partner Program. We recently shared that YPP has paid out more than any other creator monetization platform, including over $70 billion to creators, artists, and media companies over the last 3 years. |
2,591 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | From a viewer's perspective, watch time across YouTube continues to grow, with strength in both Shorts and CTV. According to Nielsen, YouTube has been the leader in U.S. streaming watch time for the last 12-plus months. In the first quarter, Livingroom. benefited from a combination of strong watch time growth, innovation in the user and advertiser experience, and a shift in brand advertising budgets from linear TV to YouTube. Viewers are watching YouTube because they expect to access everything in one place across screens and formats, their favorite creators, live sports, breaking use, educational content, movies, music and more. And advertisers continue to lean in to find audiences they can't find elsewhere.
Which brings me to monetization. We're pleased with our Q1 performance across both our ad-supported and subscription offerings. Sundar covered subscription growth. On the Ads front, direct and brand were both strong this quarter. Shorts monetization continued to improve, with Shorts ads now supported on mobile, tablet, Livingroom. and desktop, and available to both performance and brand advertisers.
In the U.S., the monetization rate of Shorts relative to in-stream viewing has more than doubled in the past 12 months, including a 10-point sequential improvement in the first quarter alone. Just last week, we introduced new ways for brands to get the most out of their Shorts ads with new lineups on YouTube Select, including sports, beauty, fashion and lifestyle, and entertainment. For YouTube advertisers, increasing brand lift is one of the core goals. In Q1, we saw strong traction from the introduction of a pause ads pilot on connected TVs, a new non-interruptive ad format that appears when users pause their organic content. Initial results show that pause ads are driving strong brand lift results and are commanding premium pricing from advertisers.
Before I wrap, two quick highlights on how we're helping our partners transform and accelerate impact with the best across Google. |
2,592 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Number one, to help McDonald's build the restaurant of the future, we're deepening our partnership across cloud and ads. Part of this includes them connecting Google Cloud's latest hardware and data technologies across restaurants globally and starting to apply Gen AI to enhance its customer and employee experiences.
Number two, WPP. At Google Cloud Next, we announced a new collaboration that will redefine marketing through the integration of our Gemini models with WPP Open, WPP's AI-powered marketing operating system, already used by more than 35,000 of its people and adopted by key clients, including The Coca-Cola Company, L'Oreal and Nestle. We're just getting started here and excited about the innovation this partnership will unlock.
With that, a huge thank you to our customers and partners, many of whom we're excited to see at Google Marketing Live and Brandcast in just a few weeks. And a huge thank you, as always, to our incredible teams for their agility and hard work this quarter.
Ruth, you're up.
Ruth Porat: Thank you, Philipp. We are very pleased with our financial results for the first quarter driven, in particular, by strength in Search and Cloud as well as the ongoing efforts to durably reengineer our cost base. My comments will be on year-over-year comparisons for the first quarter unless I state otherwise. I will start with results at the Alphabet level, followed by segment results and conclude with our outlook.
For the first quarter, our consolidated revenues were $80.5 billion, up 15% or up 16% in constant currency. Search remained the largest contributor to revenue growth. |
2,593 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | In terms of total expenses, the year-on-year comparisons reflect the impact of the restructuring charges we took in the first quarter of 2023 of $2.6 billion as well as the $716 million in employee severance and related charges in the first quarter of 2024. As you can see in our earnings release, these charges were allocated across the expense lines in other cost of revenues and OpEx based on associated head count.
To help with year-on-year comparisons, we included a table in our earnings release to adjust other cost of revenues, operating expenses, operating income, and operating margin to exclude the impact of severance and related office space charges in the first quarter of 2023 versus 2024.
In terms of expenses, total cost of revenues was $33.7 billion, up 10%. Other cost of revenues was $20.8 billion, up 10% on a reported basis, with the increase driven primarily by content acquisition costs associated with YouTube given the very strong revenue growth in both subscription offerings and ad-supported content. On an adjusted basis, other cost of revenues were up 13% year-on-year.
Operating expenses were $21.4 billion, down 2% on a reported basis, primarily reflecting expense decreases in sales and marketing and G&A, offset by an increase in R&D. The largest single factor in the year-on-year decline in G&A expenses was lower charges related to legal matters.
On an adjusted basis, operating expenses were up 5%, reflecting, first, in R&D, an increase in compensation expense, primarily for Google DeepMind and Cloud; and second, in sales and marketing, a slight increase year-on-year, reflecting increases in compensation expense primarily for Cloud sales. |
2,594 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Operating income was $25.5 billion, up 46% on a reported basis, and our operating margin was 32%. On an adjusted basis, operating income was up 31%, and our operating margin was 33%. Net income was $23.7 billion and EPS was $1.89. We delivered free cash flow of $16.8 billion in the first quarter and $69.1 billion for the trailing 12 months. We ended the quarter with $108 billion in cash and marketable securities.
Turning to segment results. Within Google Services, revenues were $70.4 billion, up 14%. Google Search and other advertising revenues of $46.2 billion in the quarter were up 14% led again by growth in retail. YouTube advertising revenues of $8.1 billion were up 21% driven by both direct response and brand advertising. Network advertising revenues of $7.4 billion were down 1%. Subscriptions, platforms and devices revenues were $8.7 billion, up 18%, primarily reflecting growth in YouTube subscription revenues.
TAC was $12.9 billion, up 10%. Google Services operating income was $27.9 billion, up 28%. And the operating margin was 40%.
Turning to the Google Cloud segment. Revenues were $9.6 billion for the quarter, up 28%, reflecting significant growth in GCP with an increasing contribution from AI and strong Google Workspace growth, primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $900 million and an operating margin of 9%.
As to our Other Bets, for the first quarter, revenues were $495 million, benefiting from a milestone payment in one of the Other Bets. The operating loss was $1 billion.
Turning to our outlook for the business. With respect to Google Services, first, within Advertising, we are very pleased with the momentum of our Ads businesses. Search had broad-based strength across verticals. In YouTube, we had acceleration in revenue growth driven by brand and direct response. |
2,595 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Looking ahead, two points to call out: first, results in our advertising business in Q1 continued to reflect strength in spend from APAC-based retailers, a trend that began in the second quarter of 2023 and continued through Q1, which means we will begin lapping that impact in the second quarter; second, the YouTube acceleration in revenue growth in Q1 reflects, in part, lapping the negative year-on-year growth we experienced in the first quarter of 2023.
Turning to subscriptions, platforms, and devices. We continue to deliver significant growth in our subscriptions business, which drives the majority of revenue growth in this line. The sequential quarterly decline in year-on-year revenue growth for the line in Q1 versus Q4 reflects, in part, the fact that we had only 1 week of Sunday Ticket subscription revenue in Q1 versus 14 weeks in Q4. Looking forward, we will anniversary last year's price increase in YouTube TV starting in May.
With regard to platforms, we are pleased with the performance in Play driven by an increase in buyers.
With respect to Google Cloud, performance in Q1 reflects strong demand for our GCP infrastructure and solutions as well as the contribution from our Workspace productivity tools. The growth we are seeing across Cloud is underpinned by the benefit AI provides for our customers. We continue to invest aggressively while remaining focused on profitable growth.
As we look ahead, two points that will affect sequential year-on-year revenue growth comparisons across Alphabet: first, Q1 results reflect the benefit of leap year, which contributed slightly more than 1 point to our revenue growth rate at the consolidated level in the first quarter; second, at current spot rates, we expect a larger headwind from foreign exchange in Q2 versus Q1. |
2,596 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Turning to margins. Our efforts to durably reengineer our cost base are reflected in a 400 basis point expansion of our Alphabet operating margin year-on-year, excluding the impact of restructuring and severance charges in both periods. You can also see the impact in the quarter-on-quarter decline in head count in Q1, which reflects both actions we have taken over the past few months and a much slower pace of hiring. As we have discussed previously, we are continuing to invest in top engineering and technical talent, particularly in Cloud, Google DeepMind and technical infrastructure.
Looking ahead, we remain focused on our efforts to moderate the pace of expense growth in order to create capacity for the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure. We believe these efforts will enable us to deliver full year 2024 Alphabet operating margin expansion relative to 2023.
With respect to CapEx, our reported CapEx in the first quarter was $12 billion, once again driven overwhelmingly by investment in our technical infrastructure, with the largest component for servers followed by data centers. The significant year-on-year growth in CapEx in recent quarters reflects our confidence in the opportunities offered by AI across our business. Looking ahead, we expect quarterly CapEx throughout the year to be roughly at or above the Q1 level, keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. With regard to Other Bets, we similarly have work streams underway to enhance overall returns. |
2,597 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Finally, as I trust you saw in the press release, we are very pleased to be adding a quarterly dividend of $0.20 per share to our capital return program as well as a new $70 billion authorization in share repurchases. The core of our capital allocation framework remains the same, beginning with investing aggressively in our business as you have heard us talk about today. Given the extraordinary opportunities ahead, we view the introduction of the dividend as further strengthening our overall capital return program.
Thank you. Sundar, Philipp, and I will now take your questions.
Operator: [Operator Instructions] Our first question comes from Brian Nowak with Morgan Stanley.
Brian Nowak: I have two. The first one, I wanted to ask about overall search behavior. Philipp, I know you talked in the past about how overall query trends continue to grow. Can I ask you to drill a little bit more into monetizable and commercial query trends? Has there been any changes in sort of your commercial query trends growth. There's just been all these new entrants moving around in e-commerce. That is my first one.
Then the second one for Ruth, when you talked about sort of more efforts to moderate expense growth from here, can you just sort of give us some examples of areas where you still see the potential for more optimization or work streams in place to continue to durably reengineer the OpEx base as we go throughout 2024. |
2,598 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | Sundar Pichai: Thanks, Brian. To your first question, look, I think broadly, we've always found that over many years, when things work well on the organic side, monetization follows. So typically, the trends we see carry over well. Overall, I think with generative AI in Search, with our AI overviews, I think we will expand the type of queries we can serve our users. We can answer more complex questions as well as, in general, that all seems to carry over across query categories. Obviously, it's still early, and we are going to be measured and put user experience at the front, but we are positive about what this transition means.
Ruth Porat: And on the second question in terms of the various work streams, as both Sundar and I said, we remain very focused on ongoing efforts to slow the pace of expense growth, what we've been calling durably reengineering our cost base. And I made this point in opening comments, but we are very cognizant of the increasing headwind we have from higher depreciation and expenses associated with the higher CapEx, and so these efforts are ongoing. And they're very much the same that we've talked with you about previously. It starts with product and process prioritization, all of the work around organizational efficiency and structure. These are ongoing.
And so as an example, the work that Sundar talked about, combining devices and services with our platforms and ecosystems, product area is a really good example because unifying the teams not only helps us deliver higher-quality products and experiences, but we think it enables us to move with greater velocity and efficiency. |
2,599 | GOOGL | 1 | 2,024 | 2024-04-25 16:30:00 | Alphabet Inc. | 29,096 | And then the other work streams we've talked to you about in the past, like all of the work around technical infrastructure, which Sundar alluded to; streamlining operations within the company through the use of AI; what we're doing with procurement with our suppliers and vendors, which he also referenced; the work you've seen on real estate optimization, these are all ongoing work streams, which is why we have them under the umbrella, durably reengineering our cost base, and they are ongoing.
Operator: Our next question comes from Doug Anmuth with JPMorgan.
Douglas Anmuth: Sundar, you talked about bringing more generative AI features into the main Search page. Can you just talk about what kind of queries or scenarios do you think that that's working best for so far? And just how we should think about the cadence of continuing to adopt more of those features within core search.
And then Ruth, on CapEx spending, the $12 billion in 1Q, can we assume that run rating that and above is reasonable for this year? And I know it's very early, but should we generally expect higher CapEx next year as well?
Sundar Pichai: Thanks, Doug. On SGE in Search, we are seeing early confirmation of our thesis that this will expand the universe of queries where we are able to really provide people with a mix of actual answers linked to sources across the Web and bring a variety of perspectives, all in an innovative way. And we've been rolling out AI overviews in the U.S. and the U.K., trying to mainly tackle queries which are more complex, where we think SGE will clearly improve the experience. We've already served billions of queries and it seems to cut across categories, but we are still continuing our testing. And we are metrics-driven in these areas. But I am optimistic that it clearly improves the user experience. Users are telling us that. And we are seeing it in our metrics, and we'll continue evolving it through the course of this year. |
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