Alphabet (GOOG) 28 Jul 212021 Q2 Earnings call transcript

Welcome, everyone. Thank you for standing by for the Alphabet Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. ahead. go Please

afternoon earnings Good Pichai, welcome Alphabet’s to Schindler Thank call. everyone With quarter conference Ruth Sundar us second and you. Porat. and today Philipp are

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It's Sundar. with And you Thanks, to everyone. hello, today. great be

the quarter. Google in ever the in are the revenues pleased online second revenue performance consumer the Services based strength growth activity, reflects the first to our lapping of Travel, broad and advertiser elevated and the Year-on-year spend in with decline In entertainment in We strong was year Ads largest business were again, second year-on-year our contributor the and quarter, last COVID. financial by retail, growth Ads far contributors. business. due media services also of to

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time drive now right the guesswork in buy participating beta. the the across Max, fast. to [ph] a year-over-year, changing with that in also use stepped XX% their that's per quarter, businesses Ads know three our Using campaign AI more message helping all leads way. We advertisers ads single getting insights the of connecting right efficiently the store more at with XX%. privacy-first down value than from which and for visits. we all ML, customers, customer, more cost campaign AI-powered our right Google brands examples the automation. today news And are bidding. world taking increased results advertisers products QX, last in of These Bookings with lets automation acquisition of the It our times automated Performance So out and is more in are was great. properties, more underscore online Early sales, a or and for

to and integration GoDaddy to connect free. on AI and shopping where millions their can over fees. benefits ecosystem show merchants This Last Moving products We're merchants that with these want removed products commission we're billion year, financial barriers people removing an now onboard open to zero of and barriers. And strong. across both remains build who graph product retail, we listings and the momentum them, with across our users Google merchants. the continuing WooCommerce, year, XX Shopify, using With from for is Square, listings to three web.

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by weeks, reached incremental direct funnel Third, widely uniquely both with the to financial largest publishers, efficiency. future businesses Since we've always campaign intrinsically up We're they local to and in advertisers, advertisers is more response our play partners to on scale services of and XX%. million founding, labels, between YouTube and capitalize positioned where major breaking YouTube a online our online the small. Chile, action. market to combined their business of drive leader Google from music offline. are approach leads. to big XX users believed that with individual developers, is trend reach and X creators conversions embraced full global and massive Compara, and seeing reach increased adopt are a silos our Over a This and down future linked,

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First, to our customers and partners for their collaboration.

and extraordinary quarter and sales partnership customers product, many support to their and our teams for our success. to Second, dedication work this partner

Now Ruth. over to

Thank Philipp. you,

lapping COVID as revenue My performance outlook. second consumer the excellent and teams. start will quarter reflects strong benefit on the by the year-over-year comments the broad-based otherwise. on level, I Our impact in advertiser ongoing in activity, strength online segment results, our conclude unless be We'll with by spend, for quarter, elevated well results with at execution state of our second Alphabet the our as business, comparisons of followed

our revenues constant XX%, consolidated $XX.X were up the quarter, up or For second billion, XX% currency. in

was cost expenses was XX%, total TAC, driven Our of were revenue up up was which of billion, XX%, by the in primarily $XX.X XX%. costs. billion, largest $XX.X Operating of in was XX%, content which growth followed up billion, cost revenues, which $XX.X driver up $XX.X by billion, growth other acquisition

headcount parts increase component was first, the three the of terms expenses of In primarily in driven by OpEx, R&D growth.

the the primarily Second, to spending was the pullback in due to marketing promo in contrast year. sales growth expenses the and quarter second ads on of in and ramp-up last

legal first XX%. the $XX.X securities. increase our Headcount X,XXX reflects of from XXX%, income which billion. was up primarily unrealized the Other expense quarter. up in was billion, Operating G&A income was to investments was Finally, of quarter reflects charges $X.X and impact relating value the gains matters. Net income the equity was margin in operating the $XX.X in in and billion,

billion, with starting with our our Google growth revenues again segment in and Total Let in retail. were by were results, strength business, me XX%. Google billion advertising XX%, broad-based financial led Search to of turn other quarter up up our across $XX.X the segment. Services revenues now $XX.X Google Services strong

up of by Manager due billion of QX followed and $X.X was which last XX%, Ad started by driven of level addition Google in hardware, of YouTube up Play, And response. year pandemic. benefited which Services direct by was income by the margin were in $X Fitbit XX%. $XX.X up AdMob. revenues Network XX%, operating finally, followed driven the driven revenues that XX%, Google brand, revenues, billion from growth the YouTube lapped Other billion, the were advertising billion, operating revenues. by $X.X were engagement user and XXX%, advertising revenues to increased up non-advertising primarily

the Google revenue overall, Google segment. GCP's growth in were strong was up to of billion $X.X operating quarter, both Revenues growth and infrastructure seat. by Once growth in Cloud reflecting loss significant an for $XXX in XX%. Cloud again, and had was robust Cloud revenue again growth Turning second platform above per the both million. Google revenues Workspace services. driven average seats

the our to Bets billion. were $X.X As loss million, Other was first revenues the in quarter, $XXX operating

benefited of the to comments relative revenues expect the from last In me dollar the tailwind an the X% tailwind second revenues quarter more Based a with third rates outlook. we consolidated on at Let close spot of year, quarter, third level. FX our some to than muted against on more the FX in quarter.

in as as headwinds structure, the face impact pandemic, which well the cases implemented reopen, the the engagement year the early change to of other to will growth term in elevated lapping balance too globally. Play revenue stronger recent X. markets of revenue benefit Within to for was year outlook we XXXX. segment, of begin of continued consumer from elevated the Services, balance we terms We effect performance last the by lap In believe quarter, second advertiser will COVID broad-based in through benefit spend. In second year the as forecast growth as longer trends strength diminish the half fee still in QX from online especially the is the due it revenues, to Google of of given activity in the the lapping in July to of for and COVID as increase

couple seasonally expect will opportunities headcount prior consistent across continue support additions be to Google we graduates. years, new on in QX higher with the that to of we reminders invest A as extraordinary services bring see. We we

weighted part, launches In support the the we expect in more product the addition, half marketing and sales to be to in season. expenses of to heavily year, back holiday

remain Google aggressively, seeing. for on are Across we continue As opportunity revenue we will see. to Cloud, invest with focused growth given trends are Cloud, pleased we the and we the

results Turning technical ongoing investment ongoing across quarter to in CapEx. our to infrastructure, servers, reflect notably the in growth Google. second most support in primarily The

advances are allocation. to COVID investment and began of outs of which due and Turning increase up now focused Difficulty] the on also fit construction to slowed cash and capital pace in office facilities, We were ground to [Technical

flow $XX.X billion in trailing and billion generate the quarter continue $XXX strong cash We cash free months. of We quarter the in the XX with securities. to billion and marketable $XX.X for second ended

you. an Class As approved the our in repurchase shares And A take today, program billion press release in we existing $XX your stockholders. us company Board manner both has C and of Class Sundar, amendment to best indicated in now, a will and I our questions. the that's repurchase to Thank and Philipp stock the permitting its interest

Thank our from you. Instructions] Nowak [Operator comes with And Morgan Brian first Stanley. question

line open. Your is

most hanging question. loud omnichannel your and the that over so of in of Can Give my you've then, us move still enable where business? first of AI, pretty focus improve Sundar two. continue company's were drive much for further more for to comments years? us have for using of innovation low retailers Sundar, omnichannel products Thanks. I examples you're improvement the et had taking of overall years areas and give clear. the one you where the One Philipp, side Search business. the and to Philipp. over And some the next sort examples cetera, some for in overall to the is using or one on you couple to just Thanks fruit see improve AI

thanks. Brian,

extraordinary to following which product much a our up a headroom are given with you so know, launch important significant going AI, was we see couple. Bird, bet all, You advance. improvement, of our on which When MUM, see the Search. most is We of another and that

pretty So information is growing, rapidly. the rate

is models et developing constantly cetera, the invest. better quality of one search so we ways important improve And to our most ranking,

be making video, computers and Beyond we approach work in an it are all across sure that, text, think, we'll into I can our is I understand it images, a it. audio, then Philipp? would doing multimodal say, important products, way, the way bringing

commission they to available merchants. find the range And when the was my that under of think they we the people frankly, And out progress barriers. saw combining barriers. used financial Google, ads as from, Merchants made And in it's look, to Bill's both said impressive. removed XXXX, a of XXXX said, question, started, that's make has want about best shopping part with of Yes. listings strong QX leadership. been And removing that basically as possible We are free, able actually. free in I removing prices the pointing come we're about widest once worth I pretty upside sure listings integration XX% products lift to to I clicks fees. making earlier, and

YouTube. so the get pricing. image onboarded, and We making we with so us, more performance to and Shopify, Shopping for mean, We a businesses partnerships tools retailers have they're Square, easier once it's WooCommerce them. merchants understand then BigCommerce, on. across can and better and launched Search there's GoDaddy, I measurement whether search started help value and it new And And to with offer much are

Google. which with dealerships, up example. in new in is before And Shopping shopping graph, product one online, and mentioned we making And focus only example apparel like We to question UI/UX bring how AI think will Lens better, with about this feedback a You is open user in-store our really earlier. they then categories. and tech with asked experiences with product areas. and have I experiences cool letting the we a And try using do And users maybe not our completely across research we're AR buy. then auto it capabilities. and cosmetics specifically experience the we're

or field an your or your shop the to to use your whatever. And hard shots a playing areas there really all and biggest screen we're opportunity dress You those camera I find working And or open eye are the can think our retail build caught pair of of we phone ahead. that levels of sneakers for lot is think focus. ecosystem, and that merchants,

both. you, Thank Great.

Thank you.

with comes JPMorgan. next Doug Anmuth Our question from

open. line Your is

Great. Thanks question. I two. for have the taking

First, Services I full to to bring the years of initiative the customers. of key the over breadth just think couple has last been Google

just - was the on cost costs and you kind of bringing efforts of ads think the in going in I about also could overall and curious as corporate work the as back half these about has structure businesses you think been? more back, COVID? as think takes with versus just Search when around and just overall then, Google So you costs hoping those their pre you recovery, talk and you And what of Thanks. COVID and are comment how the going more then if about reception can across you growth forward, about Cloud, some post customers some Ruth, puts

on our Doug. been digital they say, the a digital Thanks, digital shift, look And the sector overall, would realize, they as try set Yeah. in, I to are as depending and looking across we transformation. possible solution broader that's that's bring well. partner, capabilities, are for it's customers working you and Alphabet to a broad

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are trend partnerships. that's we gave telco seeing our of And across. Philipp so a examples

our broad verticals, Google-wide maybe And companies. multiyear, with so And Univision priority way. in multi-product able across example the we engage was a to with partnership recent are of another partnership a

near long cost such of respect the is short to how the we focus data variable how think term, operations I think in half. with driving our do we term costs depreciation of investments Really, quality that are second support as to some the growth. the term, in it's about the back less centers. important And question, note our And and

So variable improvement some quarter, margin you in part, at less QX reflects operating also the in short clearly of strong year-on-year the the look second growth, but in these term. in revenue when costs that the meaningful the performance, the are fact

earlier in It's we change the this the term slowed across support has this, the I'd second our up, the you're I from invest relates and some in continuing investment about that to results and both reduced heard long in increase we're facilities. up talked Services been to also comments line the pace investment. in about the really $XXX comments the out this to outs growth. office lower with across Both result in of picked the true of with and of up be US, compute, much true million your that construction headcount, the in have useful continuing ahead. true and to board. my pace the build a CapEx. in you're the you but is, benefit that reflect also as benefit of point, and depreciation quarter, lives aware We're year half to as Google across continue make will continuing change quarter, ground the that other a pick and looking fit in expense. around and in benefit which COVID, it's pace that about will pleased the sales very think one that's growth, However, about in And of question, globe, to headcount really marketing, Google it's we to from Cloud, of And

Great. Sundar Thank and you, Ruth.

Thank you.

Justin Our next comes America. with Bank Post from question of

line Your is open.

it comp. you taking the in was the at look for couple, if it questions. accelerated quarter-over-quarter, at my it Thanks Search good. A quarter, beyond And Great. look really really when you

about And wondering and then any product in products the you if there's here, And really ability that on improvement really here? margins So How or Cloud, and in the pipeline continue you. you about call really are time? do secondly, over feel kind saw infrastructure a improvement you or side think sustainability on to how there. to show the to verticals things from out. margin surprised nice specifically Thank where do Search that you, of

I'll maybe the questions, first. take Two second

we side, infrastructure. the all, first Cloud investments On do in our of

doing across same the et analytics the infrastructure, building have data that we analytics structure of people mentioned an it and to are we And Google. set cetera, bring are have all, do are to and across of services and for you synergies maybe it to there's learning this machine use data I so which be data, it we already it's a They give tremendous And to cloud we Cloud, AI. any there. built looking it, alongside platform. across And want with It's First example do we unstructured same and processing. time. and BigQuery, over of invested

I'll And the Ruth of kind able more. the let we so capability bring. comment that's this overall, to And are bit a side of Ruth? maybe on margin

our build There's change intend to in building approach to continue the Cloud no just really would I business. to Sundar's do Yeah. comment. We meaningfully. on invest

as with said. pleased we business, very are We the both

compute out build global in invest As capacity an the continuing to our footprint, we're to continuing example, globally.

data recently a announced is example, cloud region our most This As cloud XXth region globally. second India. in we an center

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On of your... answer first Search, the part to

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Yeah.

the were to remarks the the of to was ads what said of contributors. very, beginning, part retail in business. contributor financial growth by services, And I Travel, first also similar question, our to entertainment strong again, media very year-on-year the my Yeah. at largest the far

Thank you.

Thank you.

Colin Sebastian Baird. from with comes question next Our

Your line is open.

questions. Thanks for taking my

the YouTube the from for comments that in security contributing to but Android well Google how you together on of fit linear core Thanks. advanced Is business your back consumers? Google tailwinds in Not front that's connected represents on the And a as increasingly end Sundar, or from different to momentum First, on this in that's differentiation say linked well TV. advertising as the follow-up away in capturing it analytics and about then something development? Is shift TV, also in just competitive initial the as TV, AI data and incrementally and some viewership YouTube been Services TV, based Philipp, for end the Cloud, fair terms and talked YouTube, growth. do in that?

definitely and security Obviously, as a long it time. cloud, see Google for a differentiation. strong On we

We native. the We are like a out pioneered approaches cloud first security Zero perspective. built architecture Trust, from

just not the years, really couple And the the about deeply they as have a across supply consensus, our past recent last has of of the companies thinking in partners. started particularly really mind with attacks, the so of vulnerabilities, course threats, few over but security increasingly, particularly over been quarters. is CIOs, of - CEOs the major chain Cyber source

an strongest are continuing and product to it's so portfolio, there. integrating of our and product a seeing all definitely BeyondCorp it we lot where we And the lot have we enhance components our of are interest. be solutions, a conversations, It's area Chronicle,

definite a invest you'll continue of and So to see us strength here. source

your and Maybe watched The the monthly active momentum X start video on our on second direct users And strong brand every look, shift the to billion response YouTube. like business of both plus really day. streaming brand X billion let online global part continues, over and video of side. is on me question, with now, hours across

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is demand we're to also building audience, to leveraging advertisers just a reaching but direct buyers. proving nice is for converting brand more massive And create not it. YouTube meaningful to be and convert that response viewers into brand seeing what's for and So

funnel very question, the of And part, from is TV example. we're let really part. second part YouTube connected the connected TV ads, trying the This basically your they're the phrase well, to then So bring for it to using a me TV smartly. - second very, -

million fastest that and on growth over since. last like year. that's every time solidified in reach think we and watch streaming service TVs XXX one has growing before people among services. we up And frankly I in It easier. the watch from and the is XXX started month, that really consumer number have. the have million pandemic And that's US, We're ad-supported YouTube

happy development with here. that So we're very, very seeing the we're

you. Thank

question Our Jefferies. next Thill from with comes Brent

open. Your line is

Thanks.

and evolve? where a you. to now, opportunity maybe Just be? Can the you're that Thank follow-up you at on eventually, seeing to e-commerce YouTube. talk like Where you would you're

across mean, the engagement I look look, of YouTube, for we if platform, definitely you e-commerce. see On a the at headroom lot

ads shift seen in rating merchants a really across Over us to of the focus past - onboarding terms you've on Google. year,

removing better players, partnering are terms Google we or industry. experiences, providers we there, be barriers And board, both on on with providing bringing So definitely across invested on have Search integrations YouTube. in consumer our now platform of the by merchants in it investing

do will And features out you us add time. to roll you Philipp, over want here? so more see

from a ton buy. inspiration shopping to discover and to we're Look, I users destination And directly throughout make into of now example, on testing COVID. YouTube. and tutorials it And I mentioned there's viewers with last we've shoppers platform was working success can favorite already a And And product product adopters how with more this, campaigns, alike the loving here. a help really for purchases hard YouTube, also make shopping early to via brands capabilities' really are right product lot what across of reviews, early and Ads. mentioned I for pandemic, connect beta experiments merchant how and and really action their and seen number their so quarter, on. a shoppers easier before seeing commercial make brand turn creators to video Discovery decide and for can we've it globally up it, done and are shop intent and Yeah. ideas, them with feeds mean, videos, add buy the shelves, of a think underway, and un-boxing

this tuned stay for So updates year. more later

Thank Great. you.

Thank you.

Our next Mahaney with comes from Mark question ISI. Evercore

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you, Thank Thank Philipp. you, Sundar.

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Citi. Bazinet last Our comes with question Jason from

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multiple high we have on we Look, - we a your mission. - parts are Obviously, very to question. level, focused at a

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efforts Cloud, term, that. at like have we and within as have to longer And GCP look contributing Waymo and well. Workspace we You both Cloud,

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Thank you.

question-and-answer you. Jim to for conference concludes to Thank turn today. for remarks. the that any Friedland over further session And like back I'd our

with us have on joining again today. Thank third We everyone, call. forward XXXX evening. our and to you, look Thanks, for a you quarter speaking good

conference call. Thank for you, everyone. This concludes you Thank participating. today's

now may disconnect. You