3 ms·
Revenue is up 22% but EPS is up only 7%. I would normally expect Google's EPS growth to be higher than revenue growth. Where are they spending all that extra in
by MarkMc 10y ago
Revenue is up 22% but EPS is up only 7%. I would normally expect Google's EPS growth to be higher than revenue growth. Where are they spending all that extra income?
- tma-1 10y agoOn electricity to train all those deep neural networks.
- bitmapbrother 10y agoTheir DeepMind AI has actually decreased their energy consumption at their data centers. http://www.techrepublic.com/article/google-uses-deepmind-ai-to-reduce-energy-use-at-data-centers-and-save-money/ http://www.techrepublic.com/article/google-uses-deepmind-ai-...
- ec109685 10y agoBut they could still be spending more aggregate money on hardware for their deep learning hardware than previously.
- ChuckMcM 10y agoNotice that their TAC expenses for paid traffic went up over half a billion dollars to 10% of revenue from 8%. They are spending more to buy more traffic to grow click rate to cover lower CPC rates. You can model that like taking a hit to the gross margins.
- ucaetano 10y agoTaxes.
- MarkMc 10y agoQuite right - thanks. If Alphabet had paid the same tax rate as the previous year then net income for the quarter would have been $6.49 billion, an increase of 32%.
- curun1r 10y agoThey did increase headcount by more than 10k (from ~62k to ~72k). Headcount tends to produce more revenue eventually, but there's a lag. Staffing up by that much indicates that they're predicting significant growth.
- theDoug 10y ago(I'm an employee, with clear biases) Precisely this. Large scale infrastructure growth also costs quite a bit, especially when you pay for your own network and other works in progress https://cloud.google.com/about/locations/ https://cloud.google.com/about/locations/
- MarkMc 10y agoNo, that doesn't explain it. Some cost has to be going up by much more than 22%. Headcount only went up 16% - ie. from 62k to 72k.
- 9935c101ab17a66 10y agoHeadcount "only" went up 16%, but it doesn't mean the costs associated with increasing headcount are the same as spending in other areas right? I 100% don't know for sure, but maybe it's higher than other areas and so the increased spending in headcount (16% increase is huge no matter how you cut it) has an outsized impact?
- humanrebar 10y agoMarket rate for engineers has outpaced inflation for some time. That accounts for some of that gap.