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Google profits plummet 27 percent in Q3 2022 earnings report
- bwb 4y agoThis seems like a bit of a non-story in some ways. Their revenue was up slightly YOY, and after that crazy huge quarter and the economic slow down this seems like a non-deal.
- ninth_ant 4y agoIt doesn't mean the sky is falling, but may indicate a shift in attitude within Google as their costs grow faster than their revenues. Given that Google dominates email, search, browsers, phones, creator video, and a laundry list more things... it's definitely indicative of a story.
- bwb 4y ago1 quarter... i just find this perplexing given the short term focus. If it was a trend maybe 3 or 4 quarters indicate something. This is nothing.
- bigbee 4y agoCosts grew due to a hiring binge (that can be easily stopped, or even reversed - it’s entirely in Google’s hands) and to increased costs for their data centers (hardware, electricity) which are cyclical. There’s no indication so far of any fundamental long-term changes to the cost structure.
- time_to_smile 4y agoIt's hilarious how often nearly this exact quote appears at the top comment in any bad news that shows up on the front page. Sure this isn't the end of the world but clearly the market doesn't believe this is a "non-deal". We're also absolutely seeing a broader shift in the tech space, and traditionally companies like Google have been more immune to market changes than others. But of course the current mantra of HN is "this is fine", it's part of a broader trend of denialism in the community that major shifts, towards things being worse, in many parts of our lives are happening.
- bwb 4y agoI don't understand, it was down 7% today, that is no big deal in the grand scheme of things. Over the next 5 years do you think this matters at all to Google given their domination in so many areas? IE, why is this story on the front page of HN and why is it important? What is the narrative you get from this?
- anikom15 4y agoNobody can predict the next five months let alone the next five years.
- time_to_smile 4y ago> it was down 7% today 9.63% actually > that is no big deal in the grand scheme of things I'm not sure how you are making this claim. Today is the 2nd largest single daily drop in GOOG in the last 10 years the company (as a precent). The 1st largest drop was on 3/16/2020 The 3rd was on 3/12/2020 That means we are seeing early pandemic level drops in a price over an earnings call. Both of those other drops where due to systemic shocks to the market, this drop reflects just GOOG. So this is arguably the largest single day decline in the share price of GOOG due solely to their own performance, not do to macro trends. > why is this story on the front page of HN and why is it important? As already answered this is a historic decline in the price of GOOG. > What is the narrative you get from this? The larger story is that we're seeing a down turns in all the companies that where the hallmark of the current tech boom. The term FAANG originated because those stock were seen as incredibly strong, high growth stocks. The big part of this story is, as I have mentioned, these companies aren't losing value because of an industry trend that is equally effecting all stocks (that's happening as well) but because of their own individual performance.
- ajross 4y agoPretty much. The level of "a-ha! this confirms all my priors!" logic in these threads is just deafening. Look everyone: economies are cyclic. We had a boom. Now we're in a downturn. It's happened before, many times. It will happen again. Nothing happening today is remotely as scary as what we saw in 2008, frankly isn't nearly as disruptive as the 2001 crash. Google will be fine. The tech industry will be fine. Buy the dip, if you're into that sort of thing.
- hanoz 4y ago> Nothing happening today is remotely as scary as what we saw in 2008 As what's happening "today" is basically a postponed and amplified version of what should have happened in 2008, I have to disagree.
- mediumiqsad 4y ago
- dragontamer 4y agoUnemployment numbers at extreme lows as the Baby Boomers retire and millions of Americans are either dead or sick/disabled with Long-COVID19, hampering our economy with a lack of workers? I don't think today's economy is anything like the frothy housing bubble was in 2007/2008 timeframe. I think there's a possibility of a tech bubble akin to 2001, but that actually wasn't very disruptive for our economy. I see today more similar to 2001, aside from the weird supply chain issues due to a greatly diminished workforce (the Baby Boomer's retirement is the biggest challenge for this year IMO). (Of course, people have been calling a bubble in tech for decades now, but _eventually_ that damn tech bubble will pop again, lol)
- Kye 4y agoForum commentators have predicted 100% of every collapse would be no big deal. 2008 wasn't just one thing: it was a cascade failure that progressed over the course of months. Nobody really knew how bad it was until we were down to the wire looking at a complete collapse of the financial system. Every downturn potentially breaks something big that was built on the assumption of infinite growth and had its tendrils into too many parts of the economy. edit to add: we already see a drying up of ad spends. What happens in an economy built on selling ads, or selling services to people who sell ads when ads sales fail to meet expectations for too long? Everyone forgets data-driven advertising is what saved tech after the crash. Public opinion is rapidly turning against that savior.
- taylodl 4y agoWall St doesn't tend to see a 27% drop in profitability as a non-story. The 6% YoY growth was probably expected, but that's a dramatic rise in expenses.
- twblalock 4y agoIf Google had announced that this would happen a quarter ago, then it would be a non-story. They failed to achieve their own predictions on both EPS and revenue, by quite a bit on EPS, and that is indeed a story.
- ren_engineer 4y ago6% revenue growth is atrocious for Google and also a bad signal for the broader economy because it means companies are drastically cutting back on ad spend
- bwb 4y agoWhich is normal for an economic slow down right? Ad market always gets hit first?
- pclmulqdq 4y agoOnline advertising as a market is growing faster than Google's revenue. The real story here is that for the past year or so, they have been getting away with milking YouTube users with increasing numbers of ads, and now the consumers are rejecting that.
- colinmhayes 4y agoGrowth was like 50% last year. They're just coming back to earth in a post pandemic world. In fact growing revenue at all now that people spend so much less time on their computer seems like a huge win to me, now they just need to control costs.
- rurp 4y agoTheir stock price dropped ~9% on the news, which is pretty significant. These numbers are much worse than investors were expecting.
- bwb 4y agoMeh. Not really seeing a 1 day bet change being that important.
- jcfrei 4y agoMain point of concern seems to be that online advertising is still growing 10-20% YoY but Google revenue only grew 10% for search ads and 3.8% for youtube. So their share of ad spending is declining.
- bwb 4y agoI don't believe that for a second, do you really think that is what these numbers show?
- deleted 4y ago[deleted]
- bearjaws 4y agoI got an email from YouTube about how "we are creating more value" and I had a gut feeling their quarter was going to be trash. "We are creating value" is code word for "we're increasing the price of the service, and showing you a bunch of stuff you don't use". Guess the ad-sense money button broke and now they have to try and milk other services.
- deleted 4y ago[deleted]
- CGamesPlay 4y agoMy YouTube premium subscription cost was just doubled. Hopefully they retain more than 50% of their customers!
- jsnell 4y agoDiscussion from yesterday: https://news.ycombinator.com/item?id=33335415 https://news.ycombinator.com/item?id=33335415
- echelon 4y agoGoogle doesn't seem anti-fragile to me. They have always seemed every bit as vulnerable as Meta, but with a few extra (yet weak) plates of armor due to an unfair ecosystem they've created to funnel you into Adsense. An ecosystem that many legislators and the DOJ think violates antitrust, and that the EU and other countries are already ruling against. If Apple begins blocking their trackers (see Google's recent worldwide Chrome ad campaigns - a campaign that likely sees the writing on the wall), they lose all Apple revenue. If 10B market cap companies begin to campaign for antitrust, and Microsoft negotiates for Bing on Apple, Samsung, and Firefox, Google will lose everywhere else. I honestly don't even see why Microsoft couldn't play equally dirty and revert Chrome's default search engine on Windows to Bing. It's an equally dirty move to the stuff Google has done. Google could have a strong cloud product, but they're in distant third and aren't investing enough to take away AWS/Azure market share. Their culture of launching products for promo, launching competing products (eg messengers), and then killing them has severely damaged their reputation.
- asadlionpk 4y agoThey can surely do that but Google search does provide value. Even my mother noticed poor results when her search changed to some random bing-powered one. Also, Google has Android ie. largest OS in terms of user-base.
- P_I_Staker 4y agoYeah, I still have DDG as primary on a few devices, and I really need to change it. It doesn't do a fraction of the stuff I need... pretty much worthless to me, though I know I'm not being very fair. I think bing is better, but google still actually dominates search with a great product, compared to their competitors.
- akmarinov 4y agoAndroid is shit for monetization, you need 3x as many users to match iOS revenue from ads or subscriptions
- 4y ago
- sillysaurusx 4y agoMeta / Facebook is also down to $129 from a high of $387. That’s a staggering loss. FB is still in a strong position (to put it mildly), but it’s interesting to see this play out.
- pevey 4y agoFacebook is strategically no different than myspace a decade or two ago. When the cool kids go somewhere else, it becomes clear that the platform itself was nothing special. Edit: I was downvoted, but I stand by what I wrote. Google has Android and (for now) superior search results. Netflix has content (including their own, not just other people's). Apple has their devices, which are killing it right now. These companies will be okay. It is Facebook that might not exist in 5 years. What do they actually have other than fickle network effects that can be here today and gone tomorrow? VR? That won't save them.
- P_I_Staker 4y agoI don't know if this is really true. That shift has occurred to some extent. On the other hand, it seems to me that all the most sociable people I know are still on Facebook. There definitely are a lot of people that interact with Facebook less, which is obviously huge. I'm not sure these other social media sites will eat up Facebooks core business. It seems like Facebook could continue to struggle to grow, but these sites seem to fill different roles. I could definitely see Facebook becoming little more than a calendar/messaging system. Maybe it will collapse eventually, but what we saw with MySpace was pretty extreme, total, and sudden. It happened to Digg too, but wasn't this around the same time as the MySpace stuff was happening? I don't see much reason to think Reddit is going anywhere, either. We'll see, I wouldn't be shocked either way.
- djbusby 4y agoWell, Reddit is increasingly user hostile and their mobile experience gets worse every quarter. They'll end up killing themselves before they can IPO.
- adam_arthur 4y agoYet their headcount grew by double digits. Many tech companies living in fantasy land, having gotten used to free money and strong organic growth essentially guaranteed from secular tailwinds. At a certain scale, and level of competition (more and more social/advertising platforms becoming popular), these companies become more cyclical rather than guaranteed growth bets. Google is a great company that will surely be worth more down the line, but the whole hire as fast as possible and pay increasingly high comp is going to have to come in line with the new reality. You can't expand headcount and employment costs faster than your revenue/profit growth and expect it to end well
- kshacker 4y agoThere will always be some leading parameters some lagging parameters. It makes a difference when you are overly leveraged or if you are too small but big companies like google, Amazon, apple should be able to manage some level of forecast leading or lagging the demand, no?
- adam_arthur 4y agoSure, it’s important not to overindex on short term fluctuations. But their employment expense and headcount growth is far, far ahead of their revenue growth. A recession next year is pretty much inevitable at this point due to inflation dynamics and Fed policy. Having their stock get hammered even worse as revenues contract and margin compression eats into earnings is going to lead to many more problems for them in the future than if they just slow the pace of hiring now. They may even be doing layoffs this time next year, which is much easier to avoid if you don’t overhire leading into a recession
- ikrenji 4y agogoogles net profit is still a whopping 14 billy dollars. their search monopoly isn't going anywhere anytime soon either. i don't think googlers have anything to worry about
- 4y ago
- sschueller 4y agoYet they forced all Google workspace users that were grandfathered in free plans to start paying and are currently forcing grandfathered Google music (YouTube premium) family subscribers to eat a +50% price increase. Why would I stay with Google if my loyalty counts for nothing? Same goes for Netflix, if you aren't going to reward me being with you from day 1 why should I show you any loyalty? I will take full advantage of any free trials and cancled at the end switching from one to the other.
- hbn 4y ago> Why would I stay with Google if my loyalty counts for nothing? Sure, I'll go get my ad-free YouTube from the competition
- verisimilitudes 4y agoWatching advertisements is completely optional.
- blibble 4y agothe competition is a github page with a patched youtube app
- trollied 4y ago$13.9 billion profit is still an insane amount of money.
- bjornsing 4y agoGive it another couple of quarters…
- metacritic12 4y agoProfits are hugely volatile due to weird accounting rules (e.g. if a company holds a publicly traded subsidiary, and that sub's price drops in the quarter, all the capital loss is counted immediately as negative for "net profit" now, IIRC due to recent accounting changes). Better proxy to look at top line if you want a really rough picture of overall health. Otherwise, you need to make meticulous adjustments to bottom line, justify those adjustments, and only then do you do a bit better than top line.
- anikom15 4y agoIf a company’s asset goes down, why shouldn’t that be considered a loss? There doesn’t seem to be anything weird about that. Am I misunderstanding the reporting?
- pb7 4y agoLarge companies have a ton of “cash” — but it’s not really cash, it’s parked in equities of other companies. If the whole market goes down and those equities are worth less, yes, the company is less valuable overall so market cap should be lowered but is it indicative of the company’s success as a business?
- anikom15 4y agoI would say so, because part of a company’s business is choosing what to invest its cash in. If a company is making bad investments (or viewed as bad in the current market), then that should reflect in its price, and reporting that information helps catalyze that.
- colinmhayes 4y agothe idea is the securities they hold has nothing to do with their actual business or cash flow.
- logicalmonster 4y agoI wonder if Google would reconsider their approach to banning so many people from various programs like AdSense at some point. So many people have been screwed over that they should be making money from. And bad actors in many locations have a much easier time just creating a new company to circumvent the ban anyway.
- jesusofnazarath 4y ago
- woeirua 4y agoI'd be very nervous about being a GCP customer right now. Cloud services is hemorrhaging cash. How long before Google pulls the rug out from underneath a bunch of the services on GCP that aren't making money?
- DeathArrow 4y ago>I'd be very nervous about being a GCP customer right now. If you use Google specific functionality, then yes,you have reasons to worry. If you are host agnostic and use Google cloud just as a deployment target, then you shouldn't worry.
- woeirua 4y agoHow many people really only use these platforms as deployment targets?
- barbazoo 4y agoI'm not sure it's a realistic assumption to be able to use GCP without _any_ Google specific functionality. In an enterprise environment, even if you run your workloads on bare VMs, there are usually still things like networking, IAM, etc. that are Google specific. In my experience, there is no way to make all of your components completely cloud agnostic unless you heavily abstract everything using a 3rd party service in which case you might have just kicked the can down the road.
- ransom1538 4y agoI tell people this all the time. I just get laughed out of a room. GOOGLE WILL SUNSET GCP. They don't work on it, they hate the product, the UI is terrible, they don't use it internally. It is 8 years? behind AWS. The GCP product is designed at scale to compete with AWS ($$) - there just isn't the customer base for 8 year old dying cloud infra. So they are throwing cash at this beast which has NO future. [I manage 300k monthly spend on GCP - and they cut off the ability to get support - we can't afford it - they cut off all communication]. The only people on it are the trapped [bigquery] or stupid.
- DeathArrow 4y agoLess profits for Google means less money to do evil things. Me happy.
- Patrol8394 4y agoGoogle, went from ~$60 (March 2020) to ~$145 (August 2021) .. that's more than ~140% in ~1y ??? Did revenue grow that much to justify this crazy appreciation? Now, it sits at around ~$95, still ~50% gain since pre-covid ... I think the 2020 was a bubble and as such was not sustainable. Things are simply normalizing. And don't get me started on stocks like TWLO, ZM, etc ...