Alphabet Earnings Release FY23 Q3 [pdf](abc.xyz)
abc.xyz
Alphabet Earnings Release FY23 Q3 [pdf]
https://abc.xyz/assets/4a/3e/3e08902c4a45b5cf530e267cf818/2023q3-alphabet-earnings-release.pdf
55 comments
The iphone was released in 2007.
Blackberry posted their best quarter in _2011_.
Companies that are dead men walking frequently post record-breaking revenue long after someone else has drank their milkshake.
Blackberry posted their best quarter in _2011_.
Companies that are dead men walking frequently post record-breaking revenue long after someone else has drank their milkshake.
The iPhone was instantly taking market share from BlackBerry from release. By 2011 they already had ~20% of the market share. The same market share they hold today.
Google still hold a dominate position in Search with ~85% of the market share. The same market share they had for the past decade. No one is taking the market from them.
Their Ads business has more competition that every before, yet it still a growing business. The only company that has taken significant share from that has been Meta and that has slowed significantly for the past 3-4 years now.
So who is going to destroy Google's business like the iPhone did to BlackBerry?
You can't build a significant Ad business overnight and Ads aren't going anywhere.
Google has more 1 billion users application than any other company in the world most of them are contain Ad space for them to sell.
The only threat to Google is Meta and again Meta hasn't been a threat for the past 3-4 years.
Google still hold a dominate position in Search with ~85% of the market share. The same market share they had for the past decade. No one is taking the market from them.
Their Ads business has more competition that every before, yet it still a growing business. The only company that has taken significant share from that has been Meta and that has slowed significantly for the past 3-4 years now.
So who is going to destroy Google's business like the iPhone did to BlackBerry?
You can't build a significant Ad business overnight and Ads aren't going anywhere.
Google has more 1 billion users application than any other company in the world most of them are contain Ad space for them to sell.
The only threat to Google is Meta and again Meta hasn't been a threat for the past 3-4 years.
ppl been saying this for the past decade. There is nothing even close on the horizon to replace Google ads or search. Even if Chat GPT gains some traction for search, which is unlikely, it's not a threat at all to Google's mobile ads dominance. Despite endless promotion for the past 12 years, hardly anyone uses Duck Duck Go.
couldn't agree more.
From another point of view, it's time to end the dominance of company G, it has been killing the internet for too long: google ads are now just G tax.
On the other hand, YouTube ads revenue increased from 7,340 million to 7,665 million in respectively the quarters ended June 30 2022 and June 30 2023.
That is a revenue increase of only about 4% even though they have added way more than 4% of ads in the last year! So maybe on paper it still looks great, but advertisers are definitely spending less.
EDIT: Might also explain why they are obsessed with adblockers now on YouTube. Numbers have to go up in the next quarter again. I wonder whether accepting that the party is over might be a better long term strategy.
That is a revenue increase of only about 4% even though they have added way more than 4% of ads in the last year! So maybe on paper it still looks great, but advertisers are definitely spending less.
EDIT: Might also explain why they are obsessed with adblockers now on YouTube. Numbers have to go up in the next quarter again. I wonder whether accepting that the party is over might be a better long term strategy.
Why use the June numbers? In the September quarter the yoy growth was 12%.
There was definitely a relative slowdown as the world opened up after the pandemic. The comparisons from now on will be more relevant to the long-term growth prospects.
There was definitely a relative slowdown as the world opened up after the pandemic. The comparisons from now on will be more relevant to the long-term growth prospects.
Oh. Because I’m and idiot it seems! I have been looking at the wrong quarter. Thanks for telling me.
I hope people understand that their profits come as a result of monopolistic abuse and pitting advertisement buyers against each other in a bidding war.
We are all paying into Google coffers a tiny bit.
Maybe it's not a zero-sum game, but it's not an unlimited-sum game either. Google is doing this at the expense of the general public, through hundreds of mini-dark patterns designed to extract data and sell it back to us, at a markup (in dollars or attention).
The business may be impressive from the point of big numbers, but that's all it is. It stopped being impressive after the search quality has gone downhill and none of the other products panned out.
We are all paying into Google coffers a tiny bit.
Maybe it's not a zero-sum game, but it's not an unlimited-sum game either. Google is doing this at the expense of the general public, through hundreds of mini-dark patterns designed to extract data and sell it back to us, at a markup (in dollars or attention).
The business may be impressive from the point of big numbers, but that's all it is. It stopped being impressive after the search quality has gone downhill and none of the other products panned out.
> pitting advertisement buyers against each other in a bidding war.
How else do you sell a limited resource that more than 1 person wants?
On the other side of that bidding war is a publisher with an ad spot to sell. Sure Google takes a cut of that sale, but in every auction there is always a commission given to the auctioneer.
No one is complaining about Sotheby's making a profit when they sell the latest Banksy painting for squillions.
How else do you sell a limited resource that more than 1 person wants?
On the other side of that bidding war is a publisher with an ad spot to sell. Sure Google takes a cut of that sale, but in every auction there is always a commission given to the auctioneer.
No one is complaining about Sotheby's making a profit when they sell the latest Banksy painting for squillions.
even the Oracle of Omaha himself regrets not investing . he should have bought Google instead of IBM. oh well, everyone makes mistakes, even the GOAT
Can anyone explain why servers are now more useful for longer than they used to be? I feel the world is spinning faster, and new tech comes out faster. Especially with faster networking and more compute.
In the document they mention this:
In January 2023, we completed an assessment of the useful lives of our servers and network equipment and adjusted the estimated useful life of our servers from four years to six years and the estimated useful life of certain network equipment from five years to six years. This change in accounting estimate was effective beginning in fiscal year 2023, and the effect was a reduction in depreciation expense of $977 million and $2.9 billion and an increase in net income of $761 million and $2.3 billion, or $0.06 and $0.18 per basic and $0.06 and $0.18 per diluted share for the three and nine months ended September 30, 2023, respectively.
In the document they mention this:
In January 2023, we completed an assessment of the useful lives of our servers and network equipment and adjusted the estimated useful life of our servers from four years to six years and the estimated useful life of certain network equipment from five years to six years. This change in accounting estimate was effective beginning in fiscal year 2023, and the effect was a reduction in depreciation expense of $977 million and $2.9 billion and an increase in net income of $761 million and $2.3 billion, or $0.06 and $0.18 per basic and $0.06 and $0.18 per diluted share for the three and nine months ended September 30, 2023, respectively.
This is armchair analytics so take me with a grain of salt, but:
- server/cloud computing is largely all about performance per watt
- the latest couple gens intel seem to be struggling to innovate and are just getting better benchmarks by cranking up the power consumption. even AMD's latest release is along the lines of "x% faster per core, XX% more power draw".
So I wonder if this is percolating out into the server/cloud space where people are just watching the chipmakers trade off efficiency for benchmarks and are unimpressed.
- server/cloud computing is largely all about performance per watt
- the latest couple gens intel seem to be struggling to innovate and are just getting better benchmarks by cranking up the power consumption. even AMD's latest release is along the lines of "x% faster per core, XX% more power draw".
So I wonder if this is percolating out into the server/cloud space where people are just watching the chipmakers trade off efficiency for benchmarks and are unimpressed.
> I feel the world is spinning faster, and new tech comes out faster.
Isn't it because it's precisely the opposite? Moore's law stopped a while ago, at least that's what a lot of people think.
So much of the new tech now seems to be around GPU's and LLM's, but that doesn't affect the Google Search or YouTube or Docs servers. So they just keep humming along as usual, with a totally different set of new-fancy-tech servers spun up for the new fancy stuff.
Isn't it because it's precisely the opposite? Moore's law stopped a while ago, at least that's what a lot of people think.
So much of the new tech now seems to be around GPU's and LLM's, but that doesn't affect the Google Search or YouTube or Docs servers. So they just keep humming along as usual, with a totally different set of new-fancy-tech servers spun up for the new fancy stuff.
New tech in the server space comes out slower than it used to. Moore's Law has almost dried up.
Fifteen years ago, you could assume that you would have 50% larger hard drives and significantly more FLOPS/watt with each year's new systems. Today, that trend has almost entirely stalled.
In short: servers used to have short life-cycles not because they no longer worked, but because they had so much higher operating expenses (electricity, datacenter floor-space) than newer models. That trend no longer holds; the more relevant question today is "how long will the servers work".
Fifteen years ago, you could assume that you would have 50% larger hard drives and significantly more FLOPS/watt with each year's new systems. Today, that trend has almost entirely stalled.
In short: servers used to have short life-cycles not because they no longer worked, but because they had so much higher operating expenses (electricity, datacenter floor-space) than newer models. That trend no longer holds; the more relevant question today is "how long will the servers work".
My guess is that server farms are currently used at full capacity. So that while a few years ago the thought was to upgrade existing data centers to more efficient servers, now there is more data centers being built while slightly less efficient servers are left running where they are. This is the accounting change to reflect that: depreciate slower to reflect longer in-practice life.
Also "data center electrical power / compute" (which reflects both cooling and server power supply cost) has held relatively steady for a while which makes it easier to do that.
Also "data center electrical power / compute" (which reflects both cooling and server power supply cost) has held relatively steady for a while which makes it easier to do that.
They aren't; this is an accounting change.
My hot take is that servers could potentially last longer than 6 years so it is all really just accounting. Or at least is was never as short as 3 years.
When we were in a low/zero interest rate environment - there was a growth at all costs mentality among investors (and therefore management). Since investors didn't give any bonus points if a company was able to operate profitably - might as well depreciate to the max allowable by accounting law and not show a profit. In fact - not showing a profit was actually seen a positive features/badge of honor for a stock.
Now that interest rates have gone up, investors care about ability to generate current cashflow/net income and are prioritizing rational PE ratios - depreciating expenses over a longer time horizon (closer to reality) makes sense.
When we were in a low/zero interest rate environment - there was a growth at all costs mentality among investors (and therefore management). Since investors didn't give any bonus points if a company was able to operate profitably - might as well depreciate to the max allowable by accounting law and not show a profit. In fact - not showing a profit was actually seen a positive features/badge of honor for a stock.
Now that interest rates have gone up, investors care about ability to generate current cashflow/net income and are prioritizing rational PE ratios - depreciating expenses over a longer time horizon (closer to reality) makes sense.
No, it's an accounting change because they are.
There are many tasks for which speed is not an absolute requirement.
I bet there are lots of places that parallelisation makes more computers within the ballpark of acceptable performance perfectly cromulent to keep around.
Heck, my 2015 mac is a perfectly serviceable media player when I watch sport.
I bet there are lots of places that parallelisation makes more computers within the ballpark of acceptable performance perfectly cromulent to keep around.
Heck, my 2015 mac is a perfectly serviceable media player when I watch sport.
Why the huge jump from $83M to $1666M in "unallocated corporate costs"? The footnote says only $1M of that was hedging losses.
"As announced on April 20, 2023, we brought together part of Google Research (the Brain team) and DeepMind to significantly accelerate our progress in artificial intelligence (AI). The group, called Google DeepMind, is reported
within Alphabet's unallocated corporate costs prospectively beginning in the second quarter of 2023. Previously, the Brain team was included within Google Services."
That's not it, the 2022 segment numbers have been recast to account for that reporting change. Most of the difference seems to be explained in the "Reductions in Our Workforce and Office Space" section ($870M) and a reduction in hedging gains ($639M).
It's explained the paragraph above.
> As announced on April 20, 2023, we brought together part of Google Research (the Brain team) and DeepMind to significantly accelerate our progress in artificial intelligence (AI). The group, called Google DeepMind, is reported within Alphabet's unallocated corporate costs prospectively beginning in the second quarter of 2023. Previously, the Brain team was included within Google Services.
> As announced on April 20, 2023, we brought together part of Google Research (the Brain team) and DeepMind to significantly accelerate our progress in artificial intelligence (AI). The group, called Google DeepMind, is reported within Alphabet's unallocated corporate costs prospectively beginning in the second quarter of 2023. Previously, the Brain team was included within Google Services.
Read further down, under "Reductions in Our Workforce and Office Space"
Edit: That’s only a small part indeed.
Edit: That’s only a small part indeed.
This totals only ~$310M for Q3:
Employee severance and related charges: $86 million
Real estate exit charges: $16 million
Accelerated rent and accelerated depreciation: $207 million
Looks like Google Brain/Deepmind accounts for most of the remaining $1B-plus.
Employee severance and related charges: $86 million
Real estate exit charges: $16 million
Accelerated rent and accelerated depreciation: $207 million
Looks like Google Brain/Deepmind accounts for most of the remaining $1B-plus.
Redundancy payouts?
Cloud missed; shares fell :(
GOOG's cloud was up 22.4% year-over-year.
MSFT's cloud (Azure) was up 29% year-over-year.
If you're trying to pass/catch up to second place (MSFT), growing 6-7 percent less than second place doesn't help.
If you're trying to pass/catch up to second place (MSFT), growing 6-7 percent less than second place doesn't help.
Thanks for explaining the after market drop! What was the target for cloud?
Google’s cloud business fell short of Wall Street's estimates, topping out at $8.41 billion in the quarter versus expectations of $8.6 billion.
https://finance.yahoo.com/news/alphabet-q3-earnings-12311976...
https://finance.yahoo.com/news/alphabet-q3-earnings-12311976...
Do you think they give up on Google Cloud at some point?
they might trim some infrequently used features but I can't see them completely killing Google Cloud- not only does it make money (the only real money other than ads), the reputational hit would be immense. Imagine telling thousands of enterprises they have to move petabytes to a competitor.
There's also loads of crossover with the tooling they use to run all their own services.
Like what?
kubernetes, spanner, bigquery, gfs etc etc. a lot of stuff gets ported from google internal to google cloud and then turned into a product.
not that much. FWIW may be totally different tomorrow.
good dip buying opportunity imho
182k employees, still! Impressive.
wow. When I started there end of 2011 it was something like 35,000, and ~20,000 engineers. And even then when I went down to the Googleplex I always walked around stunned absolutely baffled what all those people were doing. (Our office had about ~300 people back then)
what are all those people doing?
You’d be surprised the challenges that crop up when a company grows to the size of a FAANG. For all the bad press they get, Timmy’s little acronym.io startup doesn’t have to have entire teams to deal with nation state actors trying to use platforms to destabilize global democracy.
I'm posting on hacker news!
Not working at a competitor.
ocdtrekkie(4)
Despite people thinking it was heading for a decline due to Bing, ChatGPT, AI ect. It just posted another quarter with all-time high revenue and this year will be its best year ever.
All sectors are growing and profit, minus other bets.
120B in cash.
25 years of growth without a single year of revenue decline is crazy at 300B yearly revenue.