Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alphabet Inc (GOOG, Financial) reported a 15% increase in consolidated revenue, with Google Cloud revenue growing by 35% year-over-year.
- The company has made significant advancements in AI, with the Gemini models being integrated across all major products and platforms, reaching over 1 billion users.
- YouTube's combined ad and subscription revenue surpassed $50 billion over the past four quarters, driven by strong growth in YouTube TV, NFL Sunday Ticket, and YouTube Music Premium.
- Alphabet Inc (GOOG) is making substantial investments in clean energy, including a corporate agreement to purchase nuclear energy, supporting its commitment to sustainability.
- The company is seeing strong engagement and increased search usage with the rollout of AI Overviews to over 100 new countries and territories.
Negative Points
- Network advertising revenue declined by 2% year-over-year, indicating challenges in this segment.
- The company faces potential legal challenges from the DOJ, which could impact its search agreements with partners like Apple.
- Alphabet Inc (GOOG) is experiencing increased costs, with total cost of revenue up by 10% and operating expenses rising by 5%.
- There is a headwind to year-over-year growth in subscription platforms and devices revenue due to the pull forward of Made by Google launches.
- The company is facing increased competition in the AI space, with a need to continuously innovate to maintain its leadership position.
Q & A Highlights
Q: Over the last year, you've introduced various GenAI-enabled Search products. Which ones are you most excited about for driving long-term search growth? What are the constraints to scaling these products?
A: Sundar Pichai, CEO: We've seen significant innovation with products like Circle to Search, Lens, and AI Overviews. These are expanding what's possible in Search, and users are adapting well, asking more queries. We're rolling out AI Overviews to over 1 billion users and expect continued evolution in 2025. Constraints like latency and cost per query are being addressed, and we're making substantial progress.
Q: Can you discuss the infrastructure advantages and CapEx efficiencies from Google's TPUs and how this affects future CapEx spending?
A: Sundar Pichai, CEO: Our AI infrastructure includes leading accelerators like GPUs and TPUs, providing best-in-class efficiency. Anat Ashkenazi, CFO: We invested $13 billion in CapEx this quarter, mainly in technical infrastructure. About 60% went to servers, including TPUs and GPUs. We expect similar investment levels in Q4 and an increase in 2025, though not as steep as between '23 and '24.
Q: What are the key learnings from Waymo's expansion into new cities, and how do you plan to scale it further?
A: Sundar Pichai, CEO: Waymo's expansion in Phoenix and San Francisco has shown positive consumer adoption. We're focused on scaling to new cities like LA and forming partnerships, such as with Uber in Austin and Atlanta. We're testing various models to plan for 2025 and beyond.
Q: How is YouTube's consumption and monetization evolving between long-form and short-form videos?
A: Philipp Schindler, Chief Business Officer: YouTube Shorts watch time is growing, with over 70 billion Shorts watched daily. Monetization rates for Shorts are improving, particularly in the US. We're providing advertisers with effective targeting options, and Shorts are integrated into video reach campaigns and YouTube Select.
Q: Can you provide insights into the consumer environment for Q4 and any notable trends across verticals?
A: Philipp Schindler, Chief Business Officer: We saw broad-based strength across verticals, with financial services and retail leading growth. There was a slight tailwind from election-related ad spend, more pronounced in YouTube ads. Overall, we expect continued strength across verticals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
