Alphabet Q2 FY2022 Earnings [pdf]

https://abc.xyz/investor/static/pdf/2022Q2_alphabet_earnings_release.pdf

by ra7 • 4 years ago

135 157 4 years ago

abc.xyz

chollida13• 4 years ago

Numbers:

- Q1 EPS $1.21 vs EST $1.32

- Q2 Rev. of $70B vs est of $70B

- Ad Rev. $56.3B vs EST of $56B, grew 12% on the year, good job!! but growth is way down from last year.

- this add revenue is good, which indicates they aren't really affected by the Iphone privacy changes like META is.

- operating margin came in at estimates

- cloud lost $858M which is higher than expected

- cloud Rev was 6.2B which is about what was expected

- Other Bets lost $1.7B, which is small enough no one will care

- other best revenue is $190M

- stock is down about 24%, wich is a beta of almost 1, maybe googles growth is done and its becoming a typical old boring stock that just makes money now

To Watch:

- all advertising is slowing, Twitter, Snap and Pins are all below their IPO price and META is down big, whatch for GOOG advertising, though normally you'd expect search advertising to be more resistant

- watch youtube add numbers, it really seems like they are playing alot more adds, normally I see 2 before each video now

- will google cloud start to approach the big 2 of azure and aws

- will they talk about hiring or layoffs

Notes:

- add revenue held up ok, compared to peers

- other bets continues to not matter, at some point waymo has to put up or get shut down

- will cash on hand grow or shrink? Looks like its down by about $10B

- cloud unit disappoints with revenue

- shares relatively flat after hours( up maybe 2%), probably a good trade to buy their peers now(snap, pins, etc, meta)

- whoever runs Google cloud must have blackmail material on Pichai, AWS and MSFT run big profitable operating margins and google cloud is losing money, this is something they should be good at, but they are somehow the only one that has figure dout how to lose money on what is a cash cow for the big 2.

What is going on with their cloud offering??

- zero hedge tweet that they've repurchased $15B of stock

shawabawa3• 4 years ago

stock is down about 24%

I thought you meant it had massively crashed on this earnings

It's down ~24% YTD (along with basically every other stock).

Up ~2% after hours on this earnings report

oneoff786• 4 years ago

Why is cloud a loss for Google but a cash cow for Amazon?

gerbler• 4 years ago

Lots of capex

Kstarek2• 4 years ago

Because Google is playing catch up and needs to pay higher salaries to poach from MSFT and AMZN and also pay much more for infra than what Amazon paid for theirs initially.

lucasbm• 4 years ago

Probably because Amazon is better at retail sales. For larger companies both Amazon and Google give an enormous amount of incentives to secure the accounts, so they have lower margins. Where they thrive is with smaller and medium businesses. Amazon is better at the market of selling to the average joe.

jjtheblunt• 4 years ago

AWS early mover advantage?

loeg• 4 years ago

Because Google is absolutely awful at Cloud and they have to subsidize heavily to attract customers.

danielmarkbruce2• 4 years ago

A lot of the cost structure is ~fixed (and high). It's pretty much the ultimate scale game.

Kstarek2• 4 years ago

I don't think Waymo will contribute meaningfully to the bottom line for at least another 3/4 years, however people had the same mentality of "put up or get shut down" regarding YouTube a few years ago, and we all know how that turned out. That said, I'm still very bullish on both the stock and Waymo specifically.

bushbaba• 4 years ago

Waymo won't contribute meaningfully for at least 2 decades. Bottom line = profit. Top line = revenue.

ceeplusplus2• 4 years ago

Adding more ads and bringing down video serving costs are tangible, achievable goals. Solving self driving is not. I honestly don't think Google has the right culture to deliver either. There's no hunger to win there.

dmitriid6• 4 years ago

Main numbers are these:

--- start quote ---

- Q2 Rev. of $70B vs est of $70B

- Ad Rev. $56.3B

--- end quote ---

80% of revenue is advertising. That's all you need to know about the company's direction and incentives.

verdverm• 4 years ago

I would submit that knowing the trend of ad revs as a percentage of the whole would tell you more than a single snapshot, which has no direction itself.

cromwellian• 4 years ago

That’s down from 97%+, the direction is more important than the current number since the change over time indicates how the company is evolving and it is obviously moving towards diversification.

azinman23• 4 years ago

It's their cash cow. Why would they stop?

But that 20% isn't advertising is much better for Alphabet than compared to 10 years ago. Waymo is the next big bet.

sidibe• 4 years ago

at some point waymo has to put up or get shut down

obviously noone is expecting significant revenue there last quarter or any near future ones so it's pretty irrelevant how they do on quarterly reports. It's been over a decade and they seem to now be making serious progress. That "some point" isn't going to be this quarter or next quarter or sneak up by surprise on anybody

hrpnk• 4 years ago

- this add revenue is good, which indicates they aren't really affected by the Iphone privacy changes like META is.

ad density would be an interesting figure. YouTube is unwatchable with ads turned on.

ghaff4• 4 years ago

That sounds like the sorts of results that tend to hammer a company. Some barely beats on low expectations. A bunch of expectations barely or misses.

lumost• 4 years ago

Likely, google perceives that their cloud losses are about on par with what they’d lose on software/other expenses if they shut down gcp and continued in house with their infrastructure (rightly or wrongly).

Compared to other bets, the loss is not large compared to growth opportunity. however the absolute numbers in these losses are interesting in and of themselves. There are clearly extremely large divisions which produce negligible revenue, let alone profit.

stingraycharles• 4 years ago

Wasn’t the whole problem with Google Cloud that they did, in fact, not dogfood this and their internal infra is completely separated?

paxys• 4 years ago

Marginally better numbers than expected. Stock is up ~3% after hours.

adam_arthur5• 4 years ago

Worse than expected by analysts, better than expected by investors. It was technically a miss

robertlagrant• 4 years ago

Analysts got it wrong again?

darth_avocado• 4 years ago

There was a pullback because of the SNAP earnings and the sentiment was that the earnings are going to be bad. The reaction is to the fact that earnings weren’t bad, missed by a small number and revenue was up overall.

arberx3• 4 years ago

The earnings call will be interesting.

chollida13• 4 years ago

What specifically about this particular earnings call will be interesting? I can't see anything of note that hasn't happened 20x before.

arberx3• 4 years ago

Tiktok threat, current macro conditions, future quarter expectations, layoffs...so many things

compiler-guy2• 4 years ago

Google added nearly 30k employees in the prior year.

No way that amount of growth is sustainable. I doubt even half of those employees are up to speed sufficiently to add value to the company. Just absorbing that many people means scores of new teams, hundreds of new managers, and mountains of additional hardware.

I'm sure they are seeing this in the costs.

tmp_anon_222• 4 years ago

hundreds of new managers

Thousands of new managers. Think about that.

lifeisstillgood6• 4 years ago

what does a manager actually do in a software business these days?

ceeplusplus2• 4 years ago

Google funds a huge number of teams internally that (in my opinion) don't do anything that contributes to the top line or bottom line or the company's image.

Not only that, but Google is known for being a "chill" place to work - good WLB, low pressure to deliver, very low chance of PIP. That attracts the wrong kind of employee. When you start seeing TikToks of people who work at Google documenting their life rather than delivering results, that's when you know the company's standards are too low.

ProAm• 4 years ago

Think about all the chat apps we'll have in a year...

jeffdn• 4 years ago

That's ~575 new employees per week (probably more, making up for turnover)! Absolutely wild.

xhkkffbf• 4 years ago

But don't worry. They've paused hiring for two full weeks!

chickenpotpie2• 4 years ago

Not really that crazy when you have 174,000 employees. A 20% increase in employees isn't really that high when you also have a 13% increase in revenue.

compiler-guy2• 4 years ago

Procuring 30,000 laptops is quite different than procuring 200 laptops. The logistics for 20% growth are materially different for a 100,000 person company vs a 1,000 person company.

Aethella• 4 years ago

Every employee they add also takes potential talent away from adding value to a start-up or competitor trying to catch-up. It's one way to protect your monopoly when there is a shortage of skilled labor.

gigatexal5• 4 years ago

This is how I think as well.

SilverBirch• 4 years ago

I think this is basically wrong. One thing lots of companies do during a recession is they try to get rid of the worst 10% of their employees. Instead they lose the top 8% and the bottom 1% and a random 1%- the top 8% see the bad news, have options and leave, the bottom 1% are obviously bad and get let go, and the other 1% are just unlucky becuase the company doesn't really have a clue who is good.

This the same thing for trying to corner the smartest engineers in the market. You're not going to corner the smartest engineers, the smartest are going to go off and work on interesting meaningful projects. But what you will get is a lot of employees who are smart, not that effective but very happy for you to pay them not to work anywhere else.

So even if the intention is to corner the top talent, they're not going to succeed because that's not what motivates most decent engineers. But also, the pool of talent is so vast that they'd bankrupt the company with that pay roll. Oh and the non-compete situation in California means even if you do manage to hire someone, if they do have a good idea they're just going to quit and build it - safe with a nest egg you helped them build.

londons_explore3• 4 years ago

A common route for people is to join a big tech company for a few years, then quit and do a startup using the skills + cash gained...

lifeisstillgood6• 4 years ago

Google: Total Rev: 70B, ads:57B, cloud 6B.

Amazon: Total rev: 116B Ads: 31B cloud:71B

It's reasonable to say that Google's biggest threat is Amazon's ad business. And instagrams not far behind.

adam_arthur5• 4 years ago

Aren't Amazon ads just sellers prioritizing their listing on the Amazon page? Seems totally different from the ad market for Google

xyzzyz• 4 years ago

Aren't Google ads just businesses prioritizing their listings on Google search page?

alecb• 4 years ago

Amazon has a pretty developed video and display advertising market for publishers called Unified Ad Marketplace; for our business, it's typically in second behind AdX/Adsense for revenue and impressions won. That said, I'm not seeing any revenue breakout from Amazon that specifies how much this side of the business makes.

next_xibalba2• 4 years ago

Huh? Isn't the ecomm component of Amazon's "Total Rev" several hundred billion?

HeyItsMatt4• 4 years ago

COGS is >70% of that number. Retailers typically subtract it before calculating gross margins.

abledon2• 4 years ago

Amazon has PrimeVideo, BlueOrigin, Trucking Fleets etc... so diverse. What is google doing with all the cash its sitting on? Is Waymo their only bet? They definitely aren't innovating with youtube, 3rd rate copycat features like 'shorts' etc... poor livestreaming/chat design. Maybe they'll just end up buying rocketlab for their space project ...

open1414• 4 years ago

https://www.vox.com/new-money/2017/4/19/15357290/juicero-400...

rohitnair• 4 years ago

Blue Origin is not part of Amazon.

chickenpotpie2• 4 years ago

https://en.m.wikipedia.org/wiki/Alphabet_Inc#Structure

_Algernon_• 4 years ago

Went over the list of new (consumer facing) products from Google from the last decade that actually got somewhere and concluded that Google Cast and Chromebooks are close to the only one (I may have missed some, but there can't be many). Nothing that compares to Gmail, search, etc.

Additionally, their existing services are getting worse and worse. YouTube is a mess, requiring at least an ad-blocker, and preferably also an extension like Unhook[1] . Google search requires a site blocker to prevent ads and spam domains from dominating the results.

Instead of furthering the development of good products it appears that the culture is focusing on creating new products to get a promotion just to let it die before it gains momentum (see https://killedbygoogle.com/).

If Google is still part of the FAANG (or is it MAANG now) accronym at the end of the decade I'll eat my top hat (I don't have one but I'll buy one just for this).

[1] https://unhook.app/

_lhb8• 4 years ago

They're spending it on feeding their engineers with free food and massages.

jsnell• 4 years ago

Your Amazon ads / AWS numbers look annual, the other numbers quarterly. Just what kind of conclusion are we supposed to draw from that?

nym375• 4 years ago

I think you might be mixing quarterly and yearly numbers.

BlackJack• 4 years ago

Amazon Ads 31B is an annual figure. Last quarter it was ~8B. Same thing with cloud; AWS pulled ~18B last quarter.

Amazon Ads is a legit threat to Google, especially with product searches. Instagram struggles to monetize commercial queries to the same degree as Goog/Amzn.

impulser_• 4 years ago

I think Google is more of a threat to Amazon than Amazon is a threat to Google.

Google Shopping and YouTube Shopping are going to eat away at Amazon being the go to place to do product searches.

spiantino• 4 years ago

Here are accurate numbers:

Google Q2: 70B, ads: 57B, cloud 6B. Net profit: $16B

Amazon Q1: 117B, ads: 8B, cloud 18B. Net profit: -$4B

lifeisstillgood6• 4 years ago

OK - at 1am I should still do better data checking - apologies please ignore the whole thing

gigatexal5• 4 years ago

Revenue grew 13% or 8B but operating income fell as did net income. Yikes. Either that additional 30k in headcount really took a toll or they are investing heavily in other areas. That or acquisition costs are rising. (I’m still reading the PDF).

gigatexal5• 4 years ago

Ahh pages 4 and 5 make more sense now. TAC went up 2B but also costs of revenue as well.

gigatexal5• 4 years ago

Total costs and expenses 42,519 50,232 (2021-2022) cost of revenue tracked more or less 1:1 with rise in revenue which is why net income was the same. Hmmm.

donalhunt3• 4 years ago

Capex spend is one area mentioned in the Investor Relations call - primarily new datacenters, office fitouts and server purchases.

Comparing q2 in 2021 and 2022 is difficult because the pandemic boosted revenues in 2021 but capex spend was delayed. And in 2022, some revenue didn't materialise due to uncertainty but investments for the future are being made.

As usual with alphabet, look at the mukti-year trend. And don't be surprised to see investment in bets that will pay off in 5+ years time.

oittaa• 4 years ago

I would guess that all three major public cloud providers will have great growth at least for a decade ahead. People here sometimes forget that there are companies outside Silicon Valley startups.

ac29• 4 years ago

They took a pretty big loss on debt and equity securities this quarter, compared to a profit in Q221. Roughly a $3B hit to net income. This might be realized or unrealized (mark to market) losses.

See page 9.

spaceman_20202• 4 years ago

Over the last few years, I’ve increasingly had to append site:reddit.com before any search query if I want some actual information.

Product reviews on Google are garbage, but everyone knows that already. What really disappointed me is searching for any slightly complex medical condition. Most of the top results are just repetitive, generic advice from “trusted” names like Webmd. Not helpful at all.

muro2• 4 years ago

https://youtu.be/NT7_SxJ3oSI

The ending has the point

quux• 4 years ago

FWIW my WaySus 22 has been great

spaceman_20202• 4 years ago

Never knew he had his own channel. His ScreenRant pitch meeting videos are gold

greatpostman4• 4 years ago

Nearly every negative google comment is downvoted

ushakov2• 4 years ago

on HN this is usually the other way around

at least as far i can remember

greatpostman4• 4 years ago

Same, I’m surprised

MegaButts2• 4 years ago

This always happens when there's a popular post about big tech on HN. Google is a big company with lots of employees and lots of investors and HN is no longer a tiny corner of the internet. Just ignore the astroturfing and look for the signal in the noise.

fshbbdssbbgdd• 4 years ago

If you poll consumers, Google is one of the most liked companies [0]. They don’t need to astroturf to get favorable comments.

Also, accusations of astroturfing are against the HN site guidelines. If you think comments are wrong, tell us why they are wrong, don’t attack the authors.

[0] https://morningconsult.com/most-loved-brands-2020/

summerlight2• 4 years ago

Among three most downvoted comments, one comment is very (and likely intentionally) misleading and the rests are uninteresting, repetitive sarcasm which deteriorates the signal to noise ratio. This might be very surprising conclusion to some of ordinary HN audiences, but could there be any realistic possibilities of those comment deserving some downvotes?

greatpostman4• 4 years ago

HN is known to be anti google/big tech. So it’s odd to see the change

danielmarkbruce2• 4 years ago

Crazy good numbers given the environment and their size.

jeffbee• 4 years ago

Ah but remember it’s “hard“ somehow to give google money. I read it here on HN. No idea where these billions came from.

jmathai2• 4 years ago

Google might be the easiest company ever to give money to.

1. Open Browser to google.com

2. Type something

3. Press enter

jjulius• 4 years ago

You're selectively ignoring the context of that thread relative to this report for the sake of snark.

Tempest1981• 4 years ago

For those wondering: https://news.ycombinator.com/item?id=32237445

yunohn• 4 years ago

That thread was about (being unable to) pay for Google Ads, which is where the majority of Google’s revenue comes from.

If it were commonly the case that paying Google is difficult, you’d see it reflected their earnings.

Alphabet Q2 FY2022 Earnings [pdf]

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