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More importantly, it announces a 70 billion dollar stock buyback. That's what the market is reacting to. Interestingly enough, it looks like everything except

• Crash0v3rid3 4y ago
  Disagree. The market is reacting to Cloud turning a profit for the first time, and faster than expected.
  • alexb_ 4y ago
    Cloud 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 ago
        From 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 ago
      Ad 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.
    • Andys 4y ago
      If its so competitive, why are profit margins so high? I understand AWS is at nearly 30%.
    • Vt71fcAqt7 4y ago
      I would question just how competitive cloud is. Companies with banks worth of cash and an existing army of technical knowhow are few and far between. The only companies that could enter the market right now are facebook and Apple.
      • hn_throwaway_99 4y ago
        By "super competitive market" he means between AWS, Azure and GCP.
    • HDThoreaun 4y ago
      Search revenue is up, overall ad is down because youtube is down a tiny bit, but mostly because "google network" revenue is down a lot.
  • illiarian 4y ago
    Cloud brought in ~1B dollars compared to previous quarter. Yet Google's overall net income is 1 billion lower than a year ago. So: - ad revenue is down (that's 80-90% of all of their revenue) - all their expenses are way up (cost of revenue 1B up, R&D expenses 2.3 B up, sales and marketing costs ~0.7 B up) - "other bets" losses increased are 400 million higher YoY - unallocated corporate losses are 3B higher YoY But google cloud (which includes both GCP and Google Workspace) is 191 million in profit. Must be nice, I guess.
    • onlyrealcuzzo 4y ago
      If growth rates continue for 5 years, Cloud will print ~$10B per quarter in profits in 2028 - that's about 50% of search currently... That would make Cloud by itself one of the 50 biggest companies in the world in terms of profits... Companies are valued at profits for 10+ years. So Cloud continuing its promising growth trajectory is a very good thing for investors. Obviously growth rates are unlikely to stay as high as they are for 5+ years - but the outlook for Cloud & Google - is still very promising.
      • illiarian 4y ago
        > If If. Would. etc. It could also not grow, and slip back to losing billions. > Companies are valued at profits for 10+ years. Wat?
        • onlyrealcuzzo 4y ago
          > It could also not grow, and slip back to losing billions. It's been growing at similar rates for 13 years - rate of growth slowly decreasing. It's way more likely to continue at it's rough trajectory than to have a sudden massive reversal. But, sure, anything is possible. Google could also get obliterated by an alien civilization. Not gonna bet on that scenario, though.
    • jsnell 4y ago
      > - unallocated corporate losses are 3B higher YoY $2.5 billion of that is charges related to the layoffs. > - all their expenses are way up (cost of revenue 1B up, R&D expenses 2.3 B up, sales and marketing costs ~0.7 B up) Likewise half of this (i.e. you're double counting). See the table on page 3. > - ad revenue is down (that's 80-90% of all of their revenue) 78% is not 80-90%. It's impressive that you managed to quote a ridiculously large range, and still get it wrong, in a discussiong about the earnings report. The ad revenue from Google properties, not from the display ad network, is up.
  • belter 4y ago
    And since there are no details what is included on Cloud, number of new customers, example of large accounts that moved to Cloud, or info how much is Workspaces versus Enterprise Cloud customers...the moment those details leak, or if this is shown to be financial reporting engineering, the market will turn very sower, very quickly.
• fshbbdssbbgdd 4y ago
  In you keep increasing the ads screen real estate by 20% every year, eventually you run out of screen.
  • ahahahahah 4y ago
    But if you keep converting 50% of the non ads space to ads, you never run out.
  • VikingCoder 4y ago
    Google announces free bigger screens for all users!
    • fshbbdssbbgdd 4y ago
      Our customers asked us for a faster horse, but we knew that what they really needed was a folding phone.
  • mupuff1234 4y ago
    Queue in the metaverse.
  • klhutchins 4y ago
    Just keep scrolling, or make the ads cycle through faster. The limit will be time and total people?
• crazygringo 4y ago
  > reliant on the assumption advertising revenue will be going up forever? Who has that assumption? At some point ads just reach steady state as a percentage of an economic sector, and therefore their growth simply mirrors GDP growth. Yes it will grow forever as the economy grows forever, but no faster. I don't think anybody thinks advertising is going to eat the whole economy, so I don't think there are any implications in that not happening.
  • funnymony 4y ago
    At 5% growth energy usage will consume whole universe in about 3000 years. Economic growth might not stop in next 10 or 100 years, but natural limits exist and eventually growth will stop.
    • onlyrealcuzzo 4y ago
      Sure - at some point - there won't be enough atoms in the universe to store numbers large enough - but money is funny. You can get 5% GDP growth without any actual growth by just devaluing dollars by 5% more than you measure inflation. Theoretically, there's nothing stopping people from paying more money for monkey JPEGs indefinitely. Physically, there's limits to how efficient things can get.
    • crazygringo 4y ago
      Growth doesn't require increased energy usage at all. To the contrary, if you figure out a way to manufacture the same widget X but using 25% less energy, that's economic growth. Long-term economic growth is primarily a phenomenon of increasing human efficiency which is enabled mainly via improved education which leads to ongoing technological progress. Sure we need energy to heat our homes and grow our food and power our transportation and build our phones and so forth, but those needs are not growing exponentially whatsoever. Homes in the developed world, for example, are becoming more energy efficient rather than less.
      • HDThoreaun 4y ago
        At some point it does though. There are limits to what you can create with limited energy.
• lakomen 4y ago
  [flagged]
• ftxbro 4y ago
  > More importantly, it announces a 70 billion dollar stock buyback. I don't pay so much attention to investment news, but the last time I heard of huge buybacks was when Intel decided to drastically cut back its research and development. It seemed to not be good for Intel. Or maybe it was good for the ones making those decisions, if they are getting bailed out by billions of government money, I don't know. Maybe I have cause and effect mixed? It could be possible.
  • magicalist 4y ago
    > I don't pay so much attention to investment news Search for "$big_company stock buyback" and you'll find just about any of them there
    • ftxbro 4y ago
      OK, does it usually mean some leading or lagging indicator that the company isn't doing well?
      • pb7 4y ago
        Apple has bought back roughly $75B per year since 2018, at least. https://ycharts.com/companies/AAPL/stock_buyback https://ycharts.com/companies/AAPL/stock_buyback
      • CydeWeys 4y ago
        Not at all. It's literally just a more tax-efficient dividend. Everyone does it these days. Companies that are failing can't afford it; you can only do these when you have excess cash.
  • deleted 4y ago
    [deleted]
  • bushbaba 4y ago
    Google spends ~20B/quarter on stock based compensation. So It's really just a 50B buy-back if they do such a large buy-back each quarter. Otherwise share-holders would be diluted. https://www.macrotrends.net/stocks/charts/GOOG/alphabet/stock-based-compensation https://www.macrotrends.net/stocks/charts/GOOG/alphabet/stoc...
• jonas21 4y ago
  Ad revenue was basically flat year over year. It seems like more of a correction after how ridiculous things got during the pandemic. It's still nearly double what it was in 2019, so I wouldn't read too much into it yet.
• imiric 4y ago
  LLMs are the next ad frontier, and revenues will hit all-time-highs when the ball gets rolling. Who needs messy user tracking when users will voluntarily feed you their deepest secrets? Why fight ad blockers, and waste resources on ad placement research, click-through rate optimization and all that noise, when you can just slip subtle ads into conversations with humans? Ad revenue isn't going anywhere but up. This is just a minor blip in the grand scheme of things.
  • monero-xmr 4y ago
    Hard, hard disagree. LLMs will reduce the blogspam driving a lot of ads. Competitors will enable bypassing Google entirely. LLM is more expensive than traditional search. I find it likely it won’t fuel additional ad spending but merely be required to keep the spending they have and defend their moat.
  • BobbyJo 4y ago
    Hard disagree. The main reason Google was so successful with advertising is that users weren't wholly aware they were feeding Google private information upon the which to base suggestions. They were out of sight and out of mind. Users will know they're talking to a corporation and feeding it information in the case of LLMs, and they're likely to give it a loss less information voluntarily than tracking was taking (and will continue to take).
    • imiric 4y ago
      There are people on this forum using ChatGPT as a therapist[1]. If someone technical who's aware of the risks is fine with it, what makes you think nontechnical users who are already fine with social media would think twice about doing that? Even if they were aware of it, they just wouldn't care. Same as today. LLMs will become an even bigger part of our everyday lives than social media is today. It would be naive to think adtech won't monetize that in the most insidious ways imaginable. Advertising, uh... finds a way. [1]: https://news.ycombinator.com/item?id=35302305 https://news.ycombinator.com/item?id=35302305
  • dahwolf 4y ago
• crdrost 4y ago
  > Interestingly enough, it looks like everything except cloud grew at a rate less than inflation. I mean, that's to be expected. Google did this sweeping cost cutting measure with the layoffs they did, rather than the usual “we don't see a future in this product and we're discontinuing it” that they are more famous for. They didn't even seem to try to target a specific performance bar—I think of this as trying to knock out walls which have lower measures of structural stresses in your house, you don't have the architectural plan so you just sledgehammer some walls that look like they're not holding much up. The problem with these broad cost cutting measures, “everyone is losing 5%-10% of head count” etc. is that even if you do a really good job targeting, 80% of the people you cut were doing something (just, if you are well-targeted, not enough on average to justify their salary) and 20% of those were in fact “load bearing” in some sense (they actually were doing enough to justify their salary, often “and then some”)... your metric just did not apply very well to them. The rest of the building needs to carry the load that you just shed, average performance takes a staggering hit. The bet is that the cut costs will save more than the performance drops, although they won't immediately due to expensive severances etc. ... Those numbers were carefully timed to be paid out in Q2 so expect those numbers to be worse and then if Pichai’s bet pays off they'll start recouping it in the second half of 2023, or else he'll feel the same pressures in late 2023 that he felt in late 2022, announce another round of layoffs... Things aren't that bad yet but I worry for my friends at Alphabet.