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Alphabet Announces Second Quarter 2021 Results
- frakt0x90 5y ago"we completed an assessment of the useful lives of our servers and network equipment and adjusted the estimated useful life of our servers from three years to four years and the estimated useful life of certain network equipment from three years to five years. This change in accounting estimate was effective beginning in fiscal year 2021 and the effect was a reduction in depreciation expense of $721 million and $1.6 billion and an increase in net income of $561 million and $1.2 billion, or $0.84 and $1.81 per basic and $0.83 and $1.78 per diluted share, for the three and six months ended June 30, 2021, respectively." Crazy how those seemingly small changes can result in huge accounting difference.
- ocdtrekkie 5y agoIt's a lot of hardware they have. I imagine this assessment took into account rising costs of replacements due to chip shortages, the fact that recent processor generations haven't actually brought meaningful performance or efficiency gains, etc. The cost/benefit of replacing server equipment is not particularly good right now.
- markus_zhang 5y agoThat's some accounting magic you have here. Next time they need the stock to go the other direction maybe they will say something else.
- sebzim4500 5y agoMaybe, but it is entirely plausible that the equipment is lasting longer than they were expecting. No one really knows how long a generation of hardware is going to last until it starts failing.
- actuator 5y agoI think more than lasting longer, it might be because of the improvements per dollar spent. We haven't seen dramatic improvements in power consumption or silicon performance, so it might be just profitable to keep the hardware longer.
- fomine3 5y agoThere are also semiconductor shortage.
- bpodgursky 5y agoThe useful life of hardware depends heavily on how sophisticated the break/fix procedures are. Lots of corps with on-prem datacenters will cycle out 3-year-old servers en masse just b/c a high failure rate causes issues for internal systems and their IT staff don't have efficient processes for replacing hard drives etc. But if Google has a sophisticated virtualization layer and an efficient way of replacing bad hardware (and they do) they can ride those old machines straight into the ground, getting every scrap of life from them. Edit: Guys, this is literally true. I worked with these teams. They did it. Downvoting doesn't make it not true. Idk what you want exactly.
- dodobirdlord 5y agoStorage failures tend to cause the biggest end-of-life disruptions, whereas CPUs and networking hardware tend to work until they suddenly don't. I interpret "servers" as meaning primarily CPUs, rather than storage, so this seems to point at functional equipment taking longer to become obsolete, rather than being more durable.
- the-rc 5y agoYears ago there was a cluster at Google where machines were kept around well past their prime, because it was cheaper than doing anything else, once you looked at all the constraints. There were still some CPUs and drives that could be reused, but the main source of pain was memory. The modules hadn't been on the market for years and recycling parts from decommissioned nodes wasn't enough. I remember one machine that came back from a power down/up cycle with too little RAM to do even its most basic job. The hardware techs that helped us had to consolidate old machines more aggressively, starting from that system. Fun days. Anyway, my point is that you never know... the CPUs were ancient, probably way older than the storage and I expected them to be the biggest problem, but in this case RAM sourcing was the real issue. Fun times.
- deleted 5y ago[deleted]
- Vaslo 5y agoThis gets removed from EBITDA though, to avoid that accounting magic
- tyingq 5y agoSort of. Depreciation is added back in, but at a lower percentage/year. 25% instead of 33%, since it's 4 years instead of 3 now.
- somebodythere 5y agoEBITDA is earnings before interest, taxes, depreciation, and amortization
- tyingq 5y agoYes. Meaning depreciation is added back in. But a different amount is added back in when you shift from a 3 year to a 4 year depreciation.
- nabakin 5y agoI think we will see more of this as time goes on. As the innovation of hardware slows, the importance of its longevity grows.
- bellyfullofbac 5y agoMy guess was their study came about more because of the chip shortage...
- dilyevsky 5y agoMeanwhile gcp hands you broadwell cpus (and sometimes haswell)
- swampthinker 5y agoGCP revenue rises from $3Bn to $4.6Bn, but how does that track against AWS and MSFT?
- doikor 5y agoNot sure what the actual number is but they did report 50% growth for last quarter https://www.microsoft.com/en-us/Investor/earnings/FY-21-Q3/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-21-Q3/p... > Server products and cloud services revenue increased 26% (up 23% in constant currency) driven by Azure revenue growth of 50% (up 46% in constant currency) edit: my link was for the quarter before but the actual previous quarter (that ended today) still reports 51% growth https://www.microsoft.com/en-us/Investor/earnings/FY-2021-Q4/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-2021-Q4... > Server products and cloud services revenue increased 34% (up 29% in constant currency) driven by Azure revenue growth of 51% (up 45% in constant currency)
- nostrademons 5y agoMSFT reported 51% revenue growth for Azure, so it's pretty constant: https://www.microsoft.com/en-us/Investor/earnings/FY-2021-Q4/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-2021-Q4...
- reilly3000 5y agoNote: that also include all Google Workspace related income.
- mupuff1234 5y agoNote #2: Microsoft also reports office 365 as part of its cloud revenue.
- phillipcarter 5y agoI don't think that's the case as per the press release: https://www.microsoft.com/en-us/Investor/earnings/FY-2021-Q4/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-2021-Q4... > Revenue in Productivity and Business Processes was $14.7 billion vs > Revenue in Intelligent Cloud was $17.4 billion The first includes Office 365 products and the second includes Azure. Several years ago they were lumped into the same figure but it's pretty clearly separated out in this reporting. Whether or not reporting on "the cloud" is a function of these two areas isn't something I'm aware of, but the source document doesn't indicate as much.
- Crash0v3rid3 5y agoInsane growth with YouTube ads revenue. I don't think any other streaming video service comes close.
- gpt5 5y agoSurely Tiktok is growing much faster.
- joering2 5y agoInsane and more invasive. Some ads makes me uncomfortable. I am eating my dinner and there is an ad about guy excited because after this specifically prepared dog food, his dog poops are now "healthy". But its not as bad as the ad for some soap where interracial couple stands under shower in what you can obviously imagine being naked, and she tells him "you smell nasty" and give him the new improved soap. Then the guy looks in the camera and says: "do whatever it takes to pleasure your lady". How the heck is Youtube approving these ads?? Side note, I am not surprised their ad revenue blew up. I never seen so much scam ads on Youtube ever before: I am daily swamp with Kevin David "make yourself billionaire by selling crap on Amazon" videos, and "This simple plug device will allow you to save 80% on your gas price". Total and complete, obvious scams. I tell you - the FTC sleeps well, while WWW became literally WILD WILD WEB [of scams]
- spywaregorilla 5y agoAll of the ads I get feature fake customers showing their undying appreciation to their insurance companies
- EliRivers 5y agoAre they not fairly targeted, based on previous things you've done online? I guess you must have dealt with an insurance company, and the previous poster, umm....
- spywaregorilla 5y ago
- sneilan1 5y agoDoes google release any numbers regarding number of search queries per quarter? I feel like the number of search queries would directly correlate with revenue, if I'm not mistaken. If not, I find it very interesting that they don't release that number. They mention a rising tide of online activity but no numbers to back that up.
- sebzim4500 5y agoI don't see why number of search queries would correlate that strongly with revenue. For a start, Alphabet does a lot of things that aren't search. Secondly an improvement in the search algorithm might mean people make fewer searches (since they get the desired results immediately) without having any real impact on revenue.
- sneilan1 5y agoI feel that search queries would correlate strongly with revenue because google serves ads next to search queries. Less search queries would mean less ads served. Also 2021 Q2 revenue from google services was 57 billion dollars which was the lions share of revenue according to the shareholder report. So yes, while Google makes money from other things, they mostly make money from search ads.
- antihipocrat 5y agoYou make a very interesting point.. I'd say that overall the better the search algorithm the more likely users would keep using your search product in the long term. However, the algorithm needs only to be noticeably better than the next best competitor. There may be a disincentive to release a cutting edge search technology until it's necessary to stave off competition, and if you've achieved monopoly, well, perhaps there's no innovation necessary.
- vgeek 5y agoNumber of searches will correlate, but they also have the black box of Quality Score (essentially a proxy for CTR, but they can manipulate CPCs/CPMs other ways), where they can arbitrarily set price floors for given auctions. There are other considerations, too. Different types of ad clicks are going to have different CPCs. Think map ads vs mainline search ads vs Shopping carousel ads or click-mix by types of queries (home service queries with $15CPCs/high CPMs vs ecommerce type queries with $0.50 CPCs/low CPMs). Non-commercial queries may grow (or shrink) at a different rate than the ones that are monetizable (pesky freeloaders! why even offer them service if they aren't able to be monetized at every interaction /s). Maybe search volume growth is coming from APAC countries with lower CPCs/CPMs due to fewer auction participants. When you look at search/search partner CPC over time, decreases due to this may become apparent. Or simply the CTR on ads is outpacing search volume growth (this is likely-- more clicks from the same pool)-- searches are a finite pool. Make the ads look just like content and more people will click them. Ads used to have a yellow box around them, vs now they match organic results much more closely. I had guessed maybe 5 years back they would start putting ads interspersed with the organic results like Baidu-- they're not there.... yet. Or tricking people into initiating subsequent searches. The last few times I've used Google for commercial searches with uBlock disabled, I've been dumb enough to misclick on the related items/people also search for cluster instead of going to the subsequent page.
- gigatexal 5y agoWow. What a quarter! Google cloud’s loss was just shy of 600M that’s down a ton.