Alphabet Inc.
CEO : Mr. Sundar Pichai
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 1.0% YoY | -17.0% | -34.5% | 2023-02-02 |
Sundar Pichai says,
Impact of Advertiser Spend and Foreign Exchange on Q4 2022 revenues
- The pullback in advertiser spend and foreign exchange impact had a significant impact on Q4 2022 revenues.
AI Opportunity Ahead
- AI is the most profound technology Google is working on today.
- Google is well positioned to lead in AI with talented researchers, infrastructure and technology.
- Google has been preparing for the AI opportunity since early last year.
- Google is unlocking the opportunities AI enables for consumers, partners, and its own business.
- Google is focusing on three big areas of opportunity: large models, providing new tools and APIs for developers, creators, and partners, and empowering businesses and organizations of all sizes with AI.
Sharpening Focus
- Google is committed to investing responsibly with great discipline and defining areas where it can operate more cost-effectively.
- Google is focused on methodically building financially sustainable, vibrant growing businesses across Alphabet.
- Google is prioritizing product investments, hiring needs, and efficiencies in technical infrastructure and productivity improvements from its AI tools.
- Google did a rigorous review across product areas and functions to ensure that its people and roles are aligned with its highest priorities as a company and announced a reduction in its workforce.
Revenue Sharing for YouTube Shorts
- Google started bringing revenue sharing to YouTube Shorts to reward creators and improve the Shorts experience for everyone.
- YouTube Shorts has been averaging over 50 billion daily views.
Google Cloud Momentum
- Q4 revenue grew 32% for Google Cloud.
- Google Cloud’s differentiated products and focused go-to-market strategy continue to drive customer momentum.
- Google Cloud’s suite of AI/ML solutions across verticals is a key differentiator.
Ruth Porat says,
Revenue Growth
- Alphabet’s revenue increased by 10% to $283 billion in 2022, contributing $37 billion to revenues, excluding the impact of foreign exchange.
- Consolidated revenues for Q4 were $76 billion, up 1% or up 7% in constant currency.
- Search remained the largest contributor to revenue growth on a constant currency basis.
Costs and Expenses
- Total cost of revenues was $35.3 billion, up 7% while other cost of revenues was $22.4 billion, up 15%.
- Operating expenses were $22.5 billion, up 10%, primarily driven by headcount growth in R&D expenses and increases in G&A expenses related to legal matters.
- Operating income decreased by 17% versus last year, and the operating margin was 24%.
Segment Results
- Google Services’ revenues were $67.8 billion, down 2%.
- Google Cloud’s revenues were $7.3 billion, up 32%, and it had an operating loss of $480 million.
- Other Bets’ revenues were $1.1 billion, and the operating loss was $6.1 billion.
Outlook and Investments
- Google is focused on investing in long-term revenue growth opportunities, particularly in advertising, YouTube subscriptions, hardware, and Google Cloud.
- Google Cloud remains optimistic about the long-term market opportunity while investing for growth and remains focused on its path to profitability.
- Alphabet is making efforts to reengineer its cost base through AI and automation to improve productivity, effective management of spend, and optimizing working conditions.
CapEx and Useful Lives of Assets
- Alphabet expects total CapEx to be generally in line with 2022.
- Alphabet adjusted the estimated useful lives of servers and certain network equipment starting in Q1 2023, which is expected to favorably impact its 2023 operating results by approximately $3.4 billion for assets and service as of year-end 2022.
Q & A sessions,
Investments in AI
- Google has been investing in AI and the market is ready for it.
- They will be launching more AI products as labs products and beta features and scaling up slowly from there.
- They are committed to developing AI responsibly and will ensure that they iterate in public and improve their models.
CapEx for 2023
- Google expects CapEx for 2023 to be generally in line with 2022 with an important mix shift.
- The company is increasing its investments in technical infrastructure to support investments across Alphabet, particularly in Cloud.
- Google is meaningfully decreasing its CapEx for office facilities.
Efficiency opportunities
- Google is keenly focused on using AI and automation to improve productivity and efficiency of their technical infrastructure.
- They are working towards durable improvements to their expense base, and this will have a more significant impact on 2024 than in 2023.
AI in products
- AI is already incorporated in many of Google’s products, such as Performance Max, Smart Bidding, and Cloud.
- AI is more compute-intensive but also opens up many more services and products for users, creators, and advertisers.
- Google is focused on optimizing the cost of compute across all elements, including data center, servers, and supply chain.
Iterative development
- Google is committed to iterating and learning from their experiences, both in terms of new products and experiences.
- They are making APIs available for developers and enterprises and learning from there to continue iterating like they’ve always done.
- Google is committed to ensuring that their models keep getting better, and they will continue to invest in making sure they can develop AI responsibly.
No bad stock 