8 ms·

Alphabet Q3 Revenue up 24%

89 points by MarkMc 9y ago

pw 9y ago
Wow, that’s quite a bit, right?
holydude 9y ago
Anything besides ads that actually make them money ? I am honestly curious if they still cannot find a way how to make money with anything else besides ads
- TekMol 9y ago
  Ads=Attention As the world moves into virtual space, nothing is as valuable as attention. Storage and Processing power are commodities. I would say owning the worlds attention is enough of a business model.
  - saimiam 9y ago
    > owning..attention They don’t own it. They only provide a way for advertisers to make an appeal for it. Sounds like a quibble but their entire business model can come crashing down in enough people start using adblockers which is already happening organically by word of mouth with little noise. Ownership would mean they can force your attention on anything they deem fit.
    - fauigerzigerk 9y ago
      And yet, in spite of ad blockers, they are reporting a 47% increase in paid clicks. Something truly massive is going on here. I'm not convinced that this is sustainable either.
- jdross 9y ago
  They sell a lot of types ads on a broad set of platforms, much like how Toyota "only sells cars". YouTube, Search, Gmail, Play store and their display network are all examples. But if you want diversification, their cloud services are growing quickly and they seem very committed to growing their hardware revenue.
- nostrademons 9y ago
  $3.4B in "other revenue" (for Google), which includes hardware sales, their cut of app sales on Google Play, enterprise products like GSuite, and Google Cloud. $302M in "other bets" (the non-Google Alphabet companies), largely from GFiber and Nest. Google - like Apple, Berkshire, and several other companies - suffers from the curse of too much capital. I would love to have a business with $3.4B in revenue - it actually puts you in the Fortune 1000 at around #675, right alongside Urban Outfitters and Citrix and slightly ahead of Diebold, Abercrombie & Fitch, and Warner Music Group. But when your other business is AdWords and makes about $90B a year, it doesn't really move the needle.
  - aneesh 9y ago
    That's $3.4B per quarter, or $13.6B annualized run rate, putting it closer to #200 on the Fortune list by revenue.
    - matt_wulfeck 9y ago
      Compre to Apple’s $6B service revenue, which is quickly on the way to be a fortune 100 company. Both companies need diversification. I’m with Google with this one long term because I think their bets are more interesting.
  - petra 9y ago
    I'm always curious why they don't built a business/engineering search tools that are far better than the competition, plus other technological building blocks, something like "a killer way to develop new technologies and businesses" and offer those as a complete package only for invested startups.
- thisisit 9y ago
  What is wrong with that? Most companies operate in a single field of business. Those who diversify sometimes don't do that great as the focus changes a lot.
- dmode 9y ago
  You can say the same thing for many companies. Example, Apple. Most of their money comes from iPhone
- jacksmith21006 9y ago
  Ads is a business model and not a product or service. Search is a service. Google generates ads from a variety of services. So not sure what you mean by diversifying? Plus fastest growing is the business not using an ad based business model. It is like saying CBS needs to diversify. Well if they only had 1 popular show then a need to diversify.
thisisit 9y ago
One thing I am curious about from the finance perspective is - How does the revenue recognition (RevRec) happen in the internet ad business? If company A has committed $200 million in ads over 6 months to Google. How will Google book and recognize this as revenue?
- matt4077 9y ago
  I'd be very surprised if it were any different than what's standard, which is to recognize the revenue when the product/service is delivered.
  - thisisit 9y ago
    Sure but the problem lies the exact definition of delivered. What does delivery mean here?
- JumpCrisscross 9y ago
  > How does the revenue recognition (RevRec) happen in the internet ad business? "Revenue from advertising is recognized when the goods or services have been delivered or provided, the amounts we charge are fixed or determinable, we and our advertisers or other customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured. We recognize as revenues the amounts charged to advertisers each time a user engages with ads that appears next to the search results or content on Google properties or Google Network Members’ properties. For those advertisers using our cost-per-impression pricing, we recognize as revenues the amounts charged to advertisers each time their ads are displayed on Google properties or Google Network Members’ properties." TL; DR When an ad is clicked on or viewed. https://www.sec.gov/Archives/edgar/data/1652044/000165204417000008/goog10-kq42016.htm#s3E4BC361FFF558ED0BF02B6547BF76E0 https://www.sec.gov/Archives/edgar/data/1652044/000165204417... Alphabet Inc. Form 10-K FYE 2016 Disclaimer: this is not securities advice. Do not buy or sell securities based on my Internet comments.
adventured 9y ago
Alphabet is closing in on Apple's financial crown. At the current rate they'd likely surpass Apple in net cash in the next 12 quarters, barring a shareholder payout (which is likely). Google, the subsidiary, is chasing down $40 billion in annualized operating income ($8.7 billion this quarter). To put that into perspective, that's equal to twice the operating income of Johnson & Johnson (a monster corporation with a $380 billion market cap). It wouldn't be far fetched for Google to reach $55-$60 billion in operating income in three years. Alphabet now has $100 billion in cash and no meaningful traditional debt. Apple has about ~$160 billion in net cash, a sum that has mostly stopped increasing. Google should stay ahead of Apple in net tangible assets this quarter as well. Given Alphabet's growth rate (and assuming it slows some), they should get near Apple's general $40x billion net income territory in three years. By contrast, Microsoft also has an immense amount of cash, at $138 billion (cash or equivalents). However they're carrying $76 billion in long-term debt. Google presently has approximately 5x the net tangible assets of Microsoft.
- dkrich 9y ago
  This assumes Apple won’t accelerate earnings, though. I think given the blowout earnings we’ve seen elsewhere in the market this is unlikely especially with Apple looking to raise average unit costs on the iPhone and iPad.
  - jacksmith21006 9y ago
    Apple is forecasted in their FY 2017 to be far worse than their 2015. While Google does over 20% growth.
- jacksmith21006 9y ago
  Totally agree on Google closing in on Apple and App!e is 22 years older. Apple FY Q3 FCF was actually less than Google FY Q3 FCF by 20%. Now Apple is off calendar by a quarter but suspect Google will do it again in Q4. Problem for Apple is their results in 2015 were better than their projected FY 2017 while Google has strong growth. iPhone replacement cycles will continue to slow just like PC sales years ago.
MarkMc 9y ago
Given its size, Google's growth rate is incredible. What's more, they still have a long way to optimise ads. I was recently shown a YouTube ad for cat food, but Google should know I don't have a cat because it has my entire photo stream for the last 3 years.
- speeq 9y ago
  Does anybody in your family have a cat? I recently visited my brother and he was talking about crowdfunding a project of his..guess what? YouTube showed me ads for crowdfunding platforms later that day, probably because I was logged into his wifi. It sure feels a bit creepy sometimes!
  - nofilter 9y ago
    Yeah, I've been in a meeting with nobody using the internet and our phones just merely sitting our pockets. 3 hours later I saw ads relevant to the conversation in the meeting, for which, again, I had not googled or used internet for, on Instagram.
    - mkbkn 9y ago
      May be the phone's microphone have picked it up.
      - nofilter 9y ago
        That was my idea as well.
    - thesehands 9y ago
      Do you think this may be a bit of Baader-Meinhof going on?
      - 1_player 9y ago
        Probably. A couple of non technical friends and I were talking about Bitcoin one evening, they had never heard of it. A few days later one of these friends calls me asking how is it possible that he's seeing Bitcoin ads everywhere after we talked. I also thought that's Baader-Meinhof happening, but it doesn't make ads any less creepy.
bsaul 9y ago
It’s time for people in the valley to team up and create a real competitor to google ad. This has been lasting for too long.
- hmate9 9y ago
  Good luck
- tenpoundhammer 9y ago
  Appnexus is a good competitor to google ads. It provides many of the same features that google ads offers. http://appnexus.com http://appnexus.com
samfisher83 9y ago
I read this in another article: https://www.cnbc.com/2017/10/26/amazon-alphabet-microsoft-intel-all-crush-earnings.html https://www.cnbc.com/2017/10/26/amazon-alphabet-microsoft-in... >In a call with CNBC, Alphabet CFO Ruth Porat reiterated the company's theme of "products with AI [artificial intelligence] at their core," but the main function of that AI today seems to be optimizing ad revenue. Are all the improvements to machine learning being made to just to show us more targeted ads?
- snarf21 9y ago
  Yes, at least for now. We are good with more specialized AI yet and those have a much longer ROI. Optimized ads hits now. I guess we can hope that this money pays for the development of the other stuff but.....
- matt_wulfeck 9y ago
  Have you used Google Photos yet? The benefit of AI is strongly apparent there.
- bllguo 9y ago
  Technologies like GPS, space travel, even the internet, were created just to improve military capabilities. Do we care, nowadays?
sova 9y ago
G is for Alphabet! (poking fun at the legacy stock ticker)

89 points by MarkMc 9y ago

pw 9y ago

Wow, that’s quite a bit, right?

Anything besides ads that actually make them money ? I am honestly curious if they still cannot find a way how to make money with anything else besides ads

TekMol 9y ago
Ads=Attention As the world moves into virtual space, nothing is as valuable as attention. Storage and Processing power are commodities. I would say owning the worlds attention is enough of a business model.
- saimiam 9y ago
  > owning..attention They don’t own it. They only provide a way for advertisers to make an appeal for it. Sounds like a quibble but their entire business model can come crashing down in enough people start using adblockers which is already happening organically by word of mouth with little noise. Ownership would mean they can force your attention on anything they deem fit.
  - fauigerzigerk 9y ago
    And yet, in spite of ad blockers, they are reporting a 47% increase in paid clicks. Something truly massive is going on here. I'm not convinced that this is sustainable either.
jdross 9y ago
They sell a lot of types ads on a broad set of platforms, much like how Toyota "only sells cars". YouTube, Search, Gmail, Play store and their display network are all examples. But if you want diversification, their cloud services are growing quickly and they seem very committed to growing their hardware revenue.
nostrademons 9y ago
$3.4B in "other revenue" (for Google), which includes hardware sales, their cut of app sales on Google Play, enterprise products like GSuite, and Google Cloud. $302M in "other bets" (the non-Google Alphabet companies), largely from GFiber and Nest. Google - like Apple, Berkshire, and several other companies - suffers from the curse of too much capital. I would love to have a business with $3.4B in revenue - it actually puts you in the Fortune 1000 at around #675, right alongside Urban Outfitters and Citrix and slightly ahead of Diebold, Abercrombie & Fitch, and Warner Music Group. But when your other business is AdWords and makes about $90B a year, it doesn't really move the needle.
- aneesh 9y ago
  That's $3.4B per quarter, or $13.6B annualized run rate, putting it closer to #200 on the Fortune list by revenue.
  - matt_wulfeck 9y ago
    Compre to Apple’s $6B service revenue, which is quickly on the way to be a fortune 100 company. Both companies need diversification. I’m with Google with this one long term because I think their bets are more interesting.
- petra 9y ago
  I'm always curious why they don't built a business/engineering search tools that are far better than the competition, plus other technological building blocks, something like "a killer way to develop new technologies and businesses" and offer those as a complete package only for invested startups.
thisisit 9y ago
What is wrong with that? Most companies operate in a single field of business. Those who diversify sometimes don't do that great as the focus changes a lot.
dmode 9y ago
You can say the same thing for many companies. Example, Apple. Most of their money comes from iPhone
jacksmith21006 9y ago
Ads is a business model and not a product or service. Search is a service. Google generates ads from a variety of services. So not sure what you mean by diversifying? Plus fastest growing is the business not using an ad based business model. It is like saying CBS needs to diversify. Well if they only had 1 popular show then a need to diversify.

thisisit 9y ago

One thing I am curious about from the finance perspective is - How does the revenue recognition (RevRec) happen in the internet ad business? If company A has committed $200 million in ads over 6 months to Google. How will Google book and recognize this as revenue?

matt4077 9y ago
I'd be very surprised if it were any different than what's standard, which is to recognize the revenue when the product/service is delivered.
- thisisit 9y ago
  Sure but the problem lies the exact definition of delivered. What does delivery mean here?
JumpCrisscross 9y ago
> How does the revenue recognition (RevRec) happen in the internet ad business? "Revenue from advertising is recognized when the goods or services have been delivered or provided, the amounts we charge are fixed or determinable, we and our advertisers or other customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured. We recognize as revenues the amounts charged to advertisers each time a user engages with ads that appears next to the search results or content on Google properties or Google Network Members’ properties. For those advertisers using our cost-per-impression pricing, we recognize as revenues the amounts charged to advertisers each time their ads are displayed on Google properties or Google Network Members’ properties." TL; DR When an ad is clicked on or viewed. https://www.sec.gov/Archives/edgar/data/1652044/000165204417000008/goog10-kq42016.htm#s3E4BC361FFF558ED0BF02B6547BF76E0 https://www.sec.gov/Archives/edgar/data/1652044/000165204417... Alphabet Inc. Form 10-K FYE 2016 Disclaimer: this is not securities advice. Do not buy or sell securities based on my Internet comments.

adventured 9y ago

Alphabet is closing in on Apple's financial crown. At the current rate they'd likely surpass Apple in net cash in the next 12 quarters, barring a shareholder payout (which is likely). Google, the subsidiary, is chasing down $40 billion in annualized operating income ($8.7 billion this quarter). To put that into perspective, that's equal to twice the operating income of Johnson & Johnson (a monster corporation with a $380 billion market cap). It wouldn't be far fetched for Google to reach $55-$60 billion in operating income in three years. Alphabet now has $100 billion in cash and no meaningful traditional debt. Apple has about ~$160 billion in net cash, a sum that has mostly stopped increasing. Google should stay ahead of Apple in net tangible assets this quarter as well. Given Alphabet's growth rate (and assuming it slows some), they should get near Apple's general $40x billion net income territory in three years. By contrast, Microsoft also has an immense amount of cash, at $138 billion (cash or equivalents). However they're carrying $76 billion in long-term debt. Google presently has approximately 5x the net tangible assets of Microsoft.

dkrich 9y ago
This assumes Apple won’t accelerate earnings, though. I think given the blowout earnings we’ve seen elsewhere in the market this is unlikely especially with Apple looking to raise average unit costs on the iPhone and iPad.
- jacksmith21006 9y ago
  Apple is forecasted in their FY 2017 to be far worse than their 2015. While Google does over 20% growth.
jacksmith21006 9y ago
Totally agree on Google closing in on Apple and App!e is 22 years older. Apple FY Q3 FCF was actually less than Google FY Q3 FCF by 20%. Now Apple is off calendar by a quarter but suspect Google will do it again in Q4. Problem for Apple is their results in 2015 were better than their projected FY 2017 while Google has strong growth. iPhone replacement cycles will continue to slow just like PC sales years ago.

MarkMc 9y ago

Given its size, Google's growth rate is incredible. What's more, they still have a long way to optimise ads. I was recently shown a YouTube ad for cat food, but Google should know I don't have a cat because it has my entire photo stream for the last 3 years.

speeq 9y ago
Does anybody in your family have a cat? I recently visited my brother and he was talking about crowdfunding a project of his..guess what? YouTube showed me ads for crowdfunding platforms later that day, probably because I was logged into his wifi. It sure feels a bit creepy sometimes!
- nofilter 9y ago
  Yeah, I've been in a meeting with nobody using the internet and our phones just merely sitting our pockets. 3 hours later I saw ads relevant to the conversation in the meeting, for which, again, I had not googled or used internet for, on Instagram.
  - mkbkn 9y ago
    May be the phone's microphone have picked it up.
    - nofilter 9y ago
      That was my idea as well.
  - thesehands 9y ago
    Do you think this may be a bit of Baader-Meinhof going on?
    - 1_player 9y ago
      Probably. A couple of non technical friends and I were talking about Bitcoin one evening, they had never heard of it. A few days later one of these friends calls me asking how is it possible that he's seeing Bitcoin ads everywhere after we talked. I also thought that's Baader-Meinhof happening, but it doesn't make ads any less creepy.

bsaul 9y ago

It’s time for people in the valley to team up and create a real competitor to google ad. This has been lasting for too long.

hmate9 9y ago
Good luck
tenpoundhammer 9y ago
Appnexus is a good competitor to google ads. It provides many of the same features that google ads offers. http://appnexus.com http://appnexus.com

samfisher83 9y ago

I read this in another article: https://www.cnbc.com/2017/10/26/amazon-alphabet-microsoft-intel-all-crush-earnings.html https://www.cnbc.com/2017/10/26/amazon-alphabet-microsoft-in... >In a call with CNBC, Alphabet CFO Ruth Porat reiterated the company's theme of "products with AI [artificial intelligence] at their core," but the main function of that AI today seems to be optimizing ad revenue. Are all the improvements to machine learning being made to just to show us more targeted ads?

snarf21 9y ago
Yes, at least for now. We are good with more specialized AI yet and those have a much longer ROI. Optimized ads hits now. I guess we can hope that this money pays for the development of the other stuff but.....
matt_wulfeck 9y ago
Have you used Google Photos yet? The benefit of AI is strongly apparent there.
bllguo 9y ago
Technologies like GPS, space travel, even the internet, were created just to improve military capabilities. Do we care, nowadays?

sova 9y ago

G is for Alphabet! (poking fun at the legacy stock ticker)