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Google announces Q1 2023 earnings [pdf]
- crecker 4y agoGoogle advertising in 2022 54,661 Google advertising in 2023 54,548
- samspenc 4y agoLooks like ad revenue (including Youtube) is falling YoY, however their cloud income is growing and pulling up overall company revenue.
- thehappypm 4y ago2022 still had pandemic tailwinds.
- neel8986 4y agoInterestingly cloud is profitable. Even being 3rd, GCP is a 30B dollar business growing at 27%.
- esotericimpl 4y ago[dead]
- jsnell 4y agoSeems like the big deal here is Cloud finally turning a profit, though it seems partially attributable to a change in the amortization schedules.
- its_ethan 4y agoI noticed this too and was wondering if there was any more info. Sounds like it's effectively just changing the payment plan such that they can say it was a net gain this Q?
- jsnell 4y agoIt's not a payment plan; they already fully paid for those servers the moment they bought it. Buying hardware is a capital cost. It's not accounted as an expense the moment it was bought and paid for, but gradually over the expected lifetime of the server. If you buy a truck you expect to use for 10 years for $50k, the company's cash goes down by $50k but its capital assets go up by $50k to match that. This purchase has no impact on the company's net income, because the cost and the value of the asset are the same. Every year the value of the truck is considered to be $5k less, so its assets go down by that amount. To make the books balance out, there's a $5k depreciation expense for that year. This is totally standard accounting, every company does it with any kind of capital goods. See the depreciation line item in the cash flow statement. This is them saying that a server's expected lifetime is now 6 years rather than 4 years, so the amount of depreciation "expense" per quarter is lower.
- deleted 4y ago[deleted]
- xnx 4y agoDid they change the definition of what counts as Cloud? I remember Google Workspace being kind of a suspicious inclusion into "Cloud".
- rippercushions 4y agoCloud = GCP + Workspace, and they're been using this definition for years.
- alexb_ 4y agoMore importantly, it announces a 70 billion dollar stock buyback. That's what the market is reacting to. Interestingly enough, it looks like everything except cloud grew at a rate less than inflation. Ad revenue is falling. What implications does this have for internet companies reliant on the assumption advertising revenue will be going up forever?
- Crash0v3rid3 4y agoDisagree. The market is reacting to Cloud turning a profit for the first time, and faster than expected.
- alexb_ 4y agoCloud turning a profit is a good thing, and makes sense. But cloud is also a super competitive market - not so for Search or Ads. Those two feel like the places Google can rely on money coming from - revenue falling for those is worrying!
- notatoad 4y ago"Cloud" for the purposes of financial reporting also includes the consumer cloud services workspace/gsuite/gdocs or whatever they're calling it now, right? not just the stuff at cloud.google.com
- illiarian 4y agoFrom the report: "Google Cloud includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues from fees received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services."
- sounds 4y agoAd spend globally may be down; can a comparison be made to competitors' ad revenue to come up with a baseline there? Youtube was a large contributor to growth in 2021-2022, and that engine appears to have slowed. (Not just the "Youtube ads" line that is separated out.) Most likely the market is reacting to these results not being any worse. Cloud gains were already priced into the stock, in my opinion.
- didip 4y agowow, Google is in full damage control mode. Seems like only the cloud business that's growing healthily. What about their hardware business?
- mvuksano 4y agoNot sure if this is due to Google "being unhealthy" or overall economy contracting. If the drop / stagnation is due to economy contracting these results are still very good.
- dmitrygr 4y ago> What about their hardware business? It was never taken seriously (source: worked there) Pixel sells as many phones per year as iPhone sells on the first day.
- illiarian 4y ago> What about their hardware business? As with anything that is not ads, it's losing money.
- pb7 4y agoCloud made money.
- prisonguard 4y agoLooks like hardware (Pixel especially) is also struggling as it is hardly mentioned?
- izacus 4y agoPixels were never profitable.
- crop_rotation 4y agoPixel never felt competitive. The camera is good but unless you live only in Google land for everything, it is hard to see it becoming a profitable product.
- Alupis 4y ago> unless you live only in Google land for everything You mean like, 99% of Android users? It's the fringe that use de-googled-yet-still-android phones - not the norm. If you're into Android, Pixel is a great offering.
- crop_rotation 4y agoNo, "99% of Android users" don't live in Google land for "everything". I am not talking about degoogled users here. But a vast majority of android users use very few google apps(apps like maps, youtube and iOS) which would be used on iOS as well) and many don't even use google photos.
- Alupis 4y ago100% of which have Gmail accounts... which is required for Play Store access and payments. A significant portion are going to have Google One (for cloud backups, including photos...). What are you talking about then? Pixel is a high-end android device, even if you try not to use google services.
- izacus 4y ago
- pcurve 4y agoGoogle Network 2022 q1: $8,174 2023 q1:$7,496 Yikes. that's a steep drop. Youtube revenue is almost flat too. Pretty worrying as a shareholder :-/
- onlyrealcuzzo 4y agoGoogle is a lot more diversified than everyone on HN seems to think.
- pcurve 4y agoThe PDF seems to indicate otherwise? Google Search & other 40B YouTube ads 6.7B Google Network 7.5B Google other 7.4B Google Cloud 7.5B Other Bets 0.288B
- bushbaba 4y agoOf which Google Cloud uses infrastructure funded by search, youtube, and ads. The Cloud costs would grow drastically if there were not Search/Ads business
- hrunt 4y agoNormally, when a company gets 80% of their revenue from one line of business, the market does not see them as "diversified". Are you saying that you think everyone on HN thinks they get a larger precentage of their revenue from ads, or that the 80/20 split in their revenue does not accurately represent their diversification?
- Workaccount2 4y agoGoogle has a cash cow that they fund all their side adventures with. And once they get board of one they either shut it down or just abandon it.
- not_good_coder 4y agoThis is the right answer!
- anoncow 4y agoAn almost flat ad business is not bad because of the post pandemic situation.
- woeirua 4y agoCloud turning a profit is good for Google, but the rest of the picture is not great. Stock buybacks are great for shareholders, but terrible for the employees and long term prospects for the company. Also, WTF is going on with their headcount? Up another 20k employees over the last year including those laid off? The future for Google almost certainly includes a lot more layoffs in order to keep their EPS up.
- VirusNewbie 4y agoPeople laid off in January were technically still employed for two or three more months after they were notified, depending on their state's WARN act.
- karmasimida 4y ago> As of March 31, 2023, the number of employees includes almost all of the employees affected by the reduction of our workforce. We expect most of those affected will no longer be reflected in our headcount by the end of the second quarter of 2023, subject to local law and consultation requirements. The layoff isn't counted yet. But I agree, if ads isn't printing as much money, Google layoffs are going to continue.
- barrkel 4y agoStock buybacks are the other side of the coin of RSUs (GSUs). A significant portion of employee income is in the form of stock.
- bombcar 4y agoDo buybacks equal RSUs? If not they’re either distributors of cash or they’re issuing stock.
- adam_arthur 4y agoDepends. For Google historically the buybacks have exceeded SBC, but looks like in the recent quarter that was not the case. Meta was famous for its buybacks being fully canceled out by SBC, though recently buybacks have started to exceed employee comp. Which is why FCF is a poor metric to use for a company that has a large portion of SBC. Completely hides the actual economics of the business. https://www.macrotrends.net/stocks/charts/GOOG/alphabet/shares-outstanding https://www.macrotrends.net/stocks/charts/GOOG/alphabet/shar... https://www.macrotrends.net/stocks/charts/META/meta-platforms/shares-outstanding https://www.macrotrends.net/stocks/charts/META/meta-platform...
- ChuckMcM 4y agoWell that was an interesting read. Some things that stood out to me, changing depreciation rules to “magically” generate $770M in revenue. Traffic acquisition costs down for the quarter (I think this is the first time in like 10 years it has gone down). And a stock buyback which does the “let’s pretend our stock is going up” trick. (IBM has been a master of this for years). None of it looked very hopeful for the future of Alphabet. A friend of mine who was in the “sudden layoff of entire projects” wave is starting to feel better about having gotten out with a severance package. I told them (as a survivor of a couple of layoffs back in the dot.com days) that there are pluses and minuses to being picked or being passed over. But everyone gets reminded to polish up their resume and start looking at the alternatives. If you still work there, keep an eye on the people you know are the ones who “get things done” as they will often be the first to leave as it is easier for them. Folks who have moved from cancelled project to cancelled project will find it harder as interviewers will be unconsciously biased against applicants who have never worked on a successful project/product. Take heart though, when “gorilla/monster/dominant” technology companies die, their former employees fertilize the field of new ideas and, at least as I’ve observered over the last 40 years, new greatness emerges.
- yodsanklai 4y ago> Folks who have moved from cancelled project to cancelled project will find it harder as interviewers will be unconsciously biased against applicants who have never worked on a successful project/product. Interviewers don't know whether your projects were successful or not (and often don't care, I don't remember ever being asked this type of questions, SWE interviewing has always been mainly technical for me).
- deleted 4y ago[deleted]
- cuteboy19 4y agoWould you hire a stadia employee or a search employee?
- 4y ago
- sharemywin 4y agoI wish I could basically match revenue for last year on the most profitable money machine in history that I inherited and get $226M
- crop_rotation 4y agoThe most profitable money machine in history might be the iPhone.
- KoftaBob 4y agoor Saudi Aramco. They're #6 in the world by revenue, but #1 by profit, just above Apple.
- belter 4y agoBecause he found the "I'm Feeling Lucky" button on their paycheck website!
- typon 4y agoSundar Pichai becomes CEO on October 24th, 2015, GOOG stock price is ~$36.87 On Apr 25, 2023 GOOG stock price is ~$103.85. I don't understand this narrative against Pichai. This is objectively a massive success in any reasonable metric. I can think of one glaring reason why there's this crusade against him.
- vicnov 4y agoYou're on a rocket ship that goes into space. It has already achieved the speed and is on the correct trajectory. Some of those on Earth started to assume the trajectory had to be corrected a year or two ago, but most people still feel like the ship is on track. In other words, Sundar is not a war CEO; he is there to ensure things are "on track" for the foreseeable future, while many people expect him to be a trailblazer who comes up with new innovative products (and not just tweaks to Ads UI).
- riku_iki 4y agoNasdaq index in general grew up about the same partially thanks to Fed printing money.
- georgewsinger 4y agoGoogle's stock is now worth more than it was on the date of ChatGPT's initial release (Nov 30th). Good test for the Efficient Markets Hypothesis: how does this make any sense?
- crazygringo 4y agoBecause Google's got its own version of ChatGPT and everybody thinks it'll do just fine incorporating it into its products?
- laweijfmvo 4y agoAnd also ChatGPT hasn't made any significant headway into taking over Google's businesses?
- tedunangst 4y agoEMH doesn't say stock prices reflect your feelings.
- mkl95 4y agoThe consensus seems to be that their stock has gone up due to laying off thousands of people, thus increasing their "efficiency". It's hard to tell how much it would be worth if ChatGPT wasn't a thing, but my guess is that it would be doing at least a bit better. To put it into words, post-2022 Google is a mildly handicapped version of itself.
- sidibe 4y agoChatGPT is talked about a lot but who is actually replacing search with it? Also no one has poured more money into AI hardware and software than Google, it's pretty naive to think OpenAI/Microsoft has a huge lead by releasing a nice product a year or two earlier.
- HDThoreaun 4y agoTheir stock is up because the macro outlook is better and they've laid off tons of people which wall st always likes.
- dahwolf 4y agoSo hard to watch, Google failing with ~70B in revenue in a SINGLE QUARTER, with 30% of margin. But...enough is enough, we had to give a signal and teach them a lesson.
- dzonga 4y agoYeah, they had to do layoffs. revenue only grew 3%. while they had increased costs via massive hiring during the pandemic. certainly, they need to cut back on other bets and personnel and salaries.
- crop_rotation 4y agoThey are certainly not cutting the CEO salary.
- iLoveOncall 4y ago> and salaries This is reckless. Cutting the number of employees is fine, but reducing salaries leads to reduced quality of the employees, which is a stupid move.
- mupuff1234 4y agoSundar has done so many giant mistakes: overhiring, under firing, zero substantial acquisitions and of course missing out on LLMs. How is he still CEO? Not to even mention his insane salary.
- mmmmmbop 4y agoAccusing Google of missing out on LLMs is shortsighted, in my opinion. They were the ones who invented the entire LLM infrastructure, and they publicly released their own chat LLM just a few months after OpenAI. It's actually quite impressive to me that a company of this ridiculous size is able to pivot and execute so quickly when needed. And let's be realistic. Had Google been the first to introduce a publicly accessible chat LLM, all the regulators that were already concerned about Google being too powerful would have intensified their calls for antitrust action against Google. Also recall that Google was not the first to ship a modern smartphone OS and it took them years to achieve a similar quality to iOS, but now they dominate the worldwide smartphone OS market.
- mupuff1234 4y agoCan you show me a single company using a Google LLM API? Now just like in cloud they're gonna be playing catch up forever. > but now they dominate the worldwide smartphone OS market And now they are slowly losing market share to Apple, another major Sundar mistake.
- mkl95 4y agoWhat's Google Cloud's crown jewel? GKE?
- roncesvalles 4y agoBetween that and Cloud Spanner
- rrdharan 4y agoBigQuery
- kenjackson 4y agoHow similar/different is this compared to others in the same space? AWS, Microsoft, etc...
- crop_rotation 4y agoThe growth is way lower than AWS when AWS was at same revenue numbers.
- kenjackson 4y agoHow is AWS growth now? I realize they are a much bigger gorilla, but these economic conditions are also much different.
- hartator 4y agoI am not sure why people defend Google results so much. When they IPO in 2004, Google was expecting to dominate the world. First trillion dollars company, 10x the size of Apple, and Microsoft being acquired as a fun side project for them. They are so far behind this and the future does look dark.
- mmmmmbop 4y agoWhere can I read more about these expectations?
- quags 4y agoI remember the ipo and also not buying because google only has search and that seemed to be an issue for me. I remember the ipo being botched. Also I didn’t buy apple thinking while the iPod was nice one product won’t bring a company back from near bankruptcy. Both companies are over a trillion dollars, have significant cash and if you bought and held you would be doing quite well. This was also during the most decade of Microsoft where people were predicting the down fall of microsoft too. So it’s hard to really gauge what a company with so much money and low debt can pull off and continue to grow.
- shmde 4y agoDislike how google owns abc.xyz like the internet starts and ends with them.
- esel2k 4y agoAnyone can post a course/youtubelink/article on how to read these earnings sheet? I am not a business person but would love to learn it from people who actually understand it.
- Mimmy 4y agoIf you want to start from "first principles", I thought this book [1] was good for getting right to the meat of accounting. It seems like there's a new edition that came out. [2] [1] https://www.amazon.com/Financial-Statements-Step-Step-Understanding/dp/1601630239 https://www.amazon.com/Financial-Statements-Step-Step-Unders... [2] https://www.amazon.com/Financial-Statements-Step-Step-Understanding-dp-1632652072/dp/1632652072/ https://www.amazon.com/Financial-Statements-Step-Step-Unders...
- dahwolf 4y ago[flagged]
- jrpt 4y agoIf you're interested, you can now talk with an AI about earnings reports. Here is the link: https://docalysis.com/files/5092656710 https://docalysis.com/files/5092656710
- summerlight 4y agoAd revenue seems flat, it's likely paying interest for the overgrowth during the pandemic period. At the moment, Google looked like afraid of the unforeseen level of recession so it put all the tricks to pull all the short-term revenue stream. Ironically, it was completely reverse; combining this to overflowing money in the market led it to the crazy level of growth (66% YoY? are you serious?). The real question would be whether Google can match its growth to inflation rates after this adjustment.
- nologic01 4y ago> Reflecting DeepMind’s increasing collaboration with Google Services, Google Cloud, and Other Bets ... Will be interesting to see where the focus of the "significantly accelerated AI strategy" will be. AI for adtech customers or AI for Cloud customers? The adtech business model seems stagnant but its not obvious (to me) what AI could do to revive its fortunes. The cloud business model seems to be growing and selling AI services (IBM Watson style) an apparently natural fit but does this mean I could use gcp to run a LLM based search service? :-)
- polygamous_bat 4y ago> The adtech business model seems stagnant but its not obvious (to me) what AI could do to revive its fortunes. This is really a "shitty-futurism" situation for me, but it would be quite possible for ChatGPT-style assistants to do product placements in their conversations.
- nologic01 4y agoI suppose if searching for information is already a disguised sales pitch you might as well bring out the chatty used car salesman :-)
- deleted 4y ago[deleted]
- xnx 4y agoIt's only been an hour, but no mention of Bing or Samsung in the comments so far. Some mentions of ChatGPT. Seems the market is not so concerned about their impact, or they're concerned, but think Google is handling it appropriately.