Alphabet (GOOG) 27 Apr 222022 Q1 Earnings call transcript

Welcome, everyone, and thank you for standing by for the Alphabet First Quarter 2022 Earnings Conference Call. [Operator Instructions] I'd now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Alphabet's first quarter 2022 earnings conference call. Sundar Schindler are Ruth today us Pichai, and Philipp Porat. With

harbor. quickly cover I'll the Now safe

Some that considered the and differ and statements of materially. statements a uncertainties financial business, regarding involve actual performance operations that our could may results of be number forward-looking, cause such we and risks make to today

For our XX-K Form the SEC. most please filed to risk the refer information, recent more factors in discussed with

to measures. we is call, GAAP present measures A today's reconciliation in will the non-GAAP to distributed the which financial this During public Investor and earnings of abc.xyz/investor. at call through I'll both located And GAAP available release, turn included to is over our non-GAAP press website now Relations and Sundar.

everyone. afternoon, Thank you, and Jim, good

months, our businesses. to last a by with technologies the we helpful towards mission, empowering people Over view develop few both continue and guided

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created the and to we about excited opportunities Just that huge Short-form are from we mobile, as new evolve desktop is see one. now. YouTube opportunities, video

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To Google features, Google work, recently into advance including Google to new introduced Finally, we Docs, we support Meet continue Workspace. Slides. hybrid and bringing directly Sheets collaboration

participate in time meetings. hear without Google live the now you as to in Q&A polls. can and XXX,XXX stream collaborate people can to You Meet need schedule real team can and who up now see your to also

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big a focus be sustainability know, us. you continues As to for

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Before and I concerned region. about unfolding the humanitarian war remain Ukraine close, the in deeply we in the crisis

Europe region. last to leaders I the many our met reaffirm in month, While was and Warsaw, Central with Poland to I across Eastern commitment

this resources. inspired our by Googlers on With moments We Search and refugees Google to thank let small. I quarter. to are help that platforms Philipp. help these enhanced in me feel find to finding to ways for people for the Over and Across contributions at their be helpful, including our products work all teams everywhere features efforts, big ways you, that,

and hi, Sundar, everyone. Thanks,

is As echoing and the humanitarian you region war always, it's to I great heartbreaking. crisis in start want Sundar. by the be deepening The with all. Ukraine across to

that remain As if raid people helping Ukraine, they're pivot in Ukranians it's OLX its with centers we enabled Android attributes marketplace, we focused hotels Maps those can alerts new to and on products Insights, on let essential during or global share to offering how help services. it's whether to which via for nearly overnight phones safety, live significantly refugee or discounted find need Ukraine's whether our product pandemic, on largest get the accommodations to help response strategy help, person-to-person free or air

quick with In ads drove again in our Google at growth growth followed to the the largest we year-over-year. quarter quarter, our were trends of this performance Retail Services by business Let's contributor the look take year-on-year QX, into first XX% before the in up pleased a travel. we was that revenues, dive it.

passports XX% XX%. travel islands Xx. on jumped or Compared Speaking destination. next 'XX global of searching planes, their to year, categories were rose versus vacation for like they're QX surged move, vacation for growth seemingly XXXX, beaches online searches above while insurance in are Query passport last prepandemic back searches searches for while travel levels. travel, rentals QX people whether and were up the XX%,

booking to info their and Maps. links expanded users via find and share to help Travel tools to comprehensive customers new launch And directly trusted reach. partners set next of travel to hotel continue to plan March, help we trip. the In this and can get their need reconnect Users Search with to We their made availability Business free options. partners for on rates earlier Google it a possible more easily extend they Profile. month, hoteliers

CPC talk among allows a help to seen that understand how from significantly on assistance harness goals their to understand sales Performance campaigns, who yielded XXx a tested we're recovery actively business a Take achieve campaign its businesses drive PMax at most has conversion of PMax Spain company's versus test same ASSIST Argentina. U.S., our accelerate Early launching the to rapidly LatAm optimal XX% higher in acquisition keywords, travel language newest with we the XXXX. rate needed particularly where in Initial CARD, best company performance the Ads to ASSIST campaigns automation adoption, lower all increased Since X simplicity AI-powered to inventory. them model a to on countries, leading other format to to and the the including in smaller new and first businesses. and PMax Let's PMax' objectives. success per drive spend complex cost expand which strong led model shows a Google in other customer moving and goals. the Max, the CARD globally November, of businesses across so Brazil,

were had provide retail, shop. seamless quarter. globally finding me where to from Maps online strong to we XXX% prefer brands balance new wherever whenever want searches experience up and Google another are buy on near that People they a for between and a year-over-year. to in-person. Moving Consumers shopping

thousands We're which new for and also rich, more this businesses including search example beauty, its Google alike, helping cool search the innovative beyond remains searches still With and we're launched but Ulta investments and in queries and multisearch earlier and month, visual brands. anywhere this box Search, from to Google go New Search. and Maybelline days, and Beauty of local in and as as is fashion right try Shoppers as strategy. box a of is content, brands, people browsable well beta a can and we're AR big now early in immersive both advancements effortless, Take shopping as more results Omnichannel products Charlotte like and including from on opportunity. retailers the benefit like our apparel virtually for delightful For discover engaging Tilbury building still to as on shopping York, way. winning big to XX-plus retailers which any experiences Google in continuing users possible. make MAC a great

Let's move to on YouTube.

strong a quarter. business brand Our had

did modest However, direct see more in growth we response.

audiences anywhere delivers spend up. taking including the TV. advertisers we're connected that to that in choose users words, ad-supported other when this streaming accounts new watch YouTube ages other in over comparison time audiences over watch by XX% watch people they smarter are reached the service. And rolled U.S. and group YouTube TVs CTV, on connected and investment The notice, advertisers Warner changer in among later and to recently were Brands help of Bros. Over to can among YouTube, we'll to Nielsen, else. their up directly YouTube using choose XX helping turning and shift into to to via measure connected help a apples-to-apples reached CTV Brands of in TV, decisions. partnership new for enthusiastic more brands across us with brand, game tap According ad-supported their people viewers key its seeing In be can't contribute ability platforms. this reach reach co-viewing. efficient Nielsen, XXX For any like creative, streaming awareness CTV linear YouTube in million million and audiences XX% to opening smarter leading for streaming measure X leaned its Batman. ahead the make year, We've compare we're Bros., help a $XXX the audience in Warner advertisers weeks plan U.S., best-performing TVs video to This December. out will be reach drive its sequencing, combination are And to in consistently of release, to for to who media TV to ad in YouTube successful weekend. and about ways. to on connected what's By expanded tools the helping video target ad-supported

address we For to between direct continue YouTube commercial feeds on video features. response, app great to commerce campaigns, new live intent there's action and product believe opportunity campaigns,

As experiences and really Engagement for advertisers. focused Sundar creators strong, mentioned, we're users, is area great we're another is about. excited on delivering and Shorts

we're advertiser still our collaborating best to closely grow them Shorts evolve install on campaigns. and In app by fact, and how encouraged products results, ads like we're action ecosystems sustainable we're them and of testing me bring Google. initial while and And it's with video the to brings healthier, partners feedback days, early which and with

focus We of a accelerating excited digital on and ecosystem Crunchyroll. partners mentioned Then Sundar continue the partnerships about are region. our India's in to with Sony's in expanding number growth

streaming Beyond Cloud, Sony we're its leadership more fans the more and Crunchyroll direct-to-consumer Google Google and anime across Android, TV market. to in Play, retain and working acquire users strengthen and and help

their As Thank to to deep and many product, always, partnership, appreciation I and our teams. partners want support sales our you. collaboration and to for customers extend and engineering, trust

possible. focus makes relentless on and our helping partners customers our success Your users,

over Ruth. Now, to

comments unless led state a I Cloud. you, the outlook. the Search and growth strong start by otherwise. Alphabet will followed My our level, comparisons at quarter segment again on results with quarter, for with be by will Thank first with year-over-year I and had first We Philipp. conclude revenue results

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

of advertising-supported XX%. driver then here content data billion Operating spend and was unrealized $XX.X value cost our for billion, X income $XX.X expenses by YouTube's was securities $X.X losses We And by by which the investments driven loss free operations, the factors billion which market in quarter cash followed across of billion the XX%, C XX%. a and billion, total subscription costs, was development, marketable driven last in $XX.X and $XX billion in equity XX%. of XX total expense quarter were revenues marketing Class billion. the shares content. biggest last was and sales expense costs securities. costs given in $XX.X months. with months. Our categories: Net of flow and reflects primary Other was was increase $XXX income an our all centers year. driven up costs revenues, of was of sales of margin XX were A we trailing delivered also up in the $XX.X again Class up operating promo in substantial and cost billion, was marketing other and as in associated for expense of billion, billion, G&A. XX $XX.X repurchased and income from growth Headcount research ended levels We and acquisition for a with XX%. content Growth primarily by Operating ramped We up and cash primarily lower back volatility. and other advertising the the The with

turn starting in other again Google the billion Google Services XX%. segment of Google by by now were our and $XX.X to were with Total quarter recovery retail, up led results, billion, followed segment. financial me in revenues Let Search our XX%, $XX.X up Services travel. revenues continued advertising

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the million. Turning driven the revenue to than billion XX%. growth Cloud and up by of seats first GCP's Cloud's, was in reflecting growth $XXX in Google again average Workspace Revenues growth for platform $X.X services. was Google operating Cloud significant segment. seat. both infrastructure and were revenue in greater loss an both had Strong per solid revenue quarter, growth Google

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

and technologies with on me the the performance of the years. to the investing quarter, outlook. Let We close notwithstanding to first our is many results pleased helpful reflection our outlook. committed with investment reflect build investments some which talent compute our benefit remain growth continued company. long-term in focus our in over The uncertainty made we've most support We're comments global of long-term of on in capacity strong across in continue the visible to

businesses for of Google lapping delivered we Services, tailwind rest rates growth in the the not COVID-related our in by we benefited have outlook In XXXX revenue year. weakness for XXXX. terms advertising Obviously, this from segment that will the of in

XXXX, in that largest comp the second a tough means of the quarter from discussed of our prior second As particularly XXXX. the results in calls, recovery as was the COVID had impact we will lap we quarter quarter the in second we face of on which XXXX, in

lap that Additionally, affect due a growth the the was other year decline revenues reflect versus the Russia. we will offset changes the changes. substantial quarter YouTube majority XXXX the quarter results commercial second in throughout the in first our in results we until will to These we revenues, activities of subscription revenues vast continue to by suspended quarter, last first our introduction of in announced. continue Play fee previously the the to changes fee Within

deal Google our AI strength regions. quarter analytics Cloud. infrastructure Turning global collaboration performance businesses digitally the to across choosing them are increasingly and first Cloud's and to Cloud growing offerings, in and multiple benefits data Customers reflects capabilities volume help our transform industries using and of the Google Workspace. their

see. and in in comparisons Alphabet the were in majority the larger At biggest continue areas on to technical to last respect Cloud the strengthened in expect in reported year, sizable versus that with again the for dollar the people invest roles. first greater we With We Alphabet level, QX headcount, quarter compared headwind Cloud given and in of aggressively reflect last X,XXX market rates in impact across from X-point headcount current both QX first first a given revenues and of the quarter both even technical tailwind in U.S. the were the based with spot roles. a quarter this QX versus for second headwind exchange In foreign an increase the the increases the on hires we X-point have year rates. sales year-over-year we will tailwind XXXX. The quarter, in quarter, product impact the opportunity added

New in office London which Poland acquisitions of in converged for of closing The first York, the quarter. previously. investment of billion nearly and the covers CapEx. to the More the Turning several that purchases quarter had timing total, mentioned first we in the reflects specifically, X facilities, large

in to last meaningful CapEx We versus expect year. a continue XXXX increase in

For infrastructure component. the in particularly in the investments XXXX, will reflected globally balance the be as technical of with servers largest increase

now best your repurchase stockholders. company of that's in A a you. to our take the in C its shares and additional of the billion press Class our has As And will stated up interest and the I questions. in Class our $XX Board today, of release Thank an Philipp authorized Sundar, manner and

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

I have two.

ad forces talk sort then uncertainty you about of then sort a second the Ruth, in some us how overall strategically tools Can cetera? growth us should little long think quarter, color perspective? And the broader have Search bit your throughout these about a understanding seen takes drive the -- product to you there's could you And at months, you Performance Max. we the long of wondering, quarters, Philipp. growth type to adoption? it business about for around about maybe the takes are sales you that? of the Where to with SMB et talk at think quarter-to-date it in broader of to years? Appreciate The first and get Ukraine, all just shape first How all do a full adoption one, what one like of of adoption business from on

Brian. Thanks,

So opening were I in with commented as revenue across we I say the generally, you're of COVID-related the ad first very in are say opening we XXXX. Philipp that and would looking I growth the in delivered the advertising in did the comments, benefit in I said forward, would year-on-year retail, that businesses asking And we've from lapping weakness and comments, would in Search we as quarter, Search -- on. rates strength in I seen up more I it XXXX in as business, say, how the pleased growth our reflected terms really the as did the XX%. revenue

the had of COVID. for year. QX as to key of impact from is XXXX. areas one the That think rest is largest the I I this point that one to focus And that not key So was of tailwind noted, where going have we we're

we're that to suspended second quarter the the So impact say, activities we are in in foreign means commercial then the of noted majority would going said. our vast tough second I results of in And quarter that continue face to comp, going XXXX, to the of as a reflect exchange. addition, I I Russia.

couple we at called about there. the points a in good key looking I that what doing we're we're of out it as So generally, business, feel

on recap. across can really just new for best same input, Performance advertisers' with customer and And to campaigns. question for new the by Using automation details our about maybe their now way, quarter new Google's campaign which And goals, Smart one-click upgrade reach quick advertisers effort. including multiple campaigns just today, we Max, a we covered brings an Shopping as the same to It Max, level reach channels. the features we and well, formats, tool serve Performance inventory insights. help announced More your acquisition together expanding the Local last maximize the efficiency of on

So we're very, very there Max this. and we've advertisers axis, I specifically helping looked very committed axis we how And for been on our do Performance rollouts. at have to can time material don't to is in that feedback time your deliver think advertiser open to a difference previous the

advertising As the for our maximum always, performance value focused on generating and partners.

next our from from comes And question Sheridan Eric Goldman Sachs.

strategic of driving goals maybe and mix video be long-form initiatives go video the engagement the about sticking begin to quarter you March? of pockets from around especially some about versus standpoint, of that in you of or maybe you of Maybe a Brian's commentary called period growth in with user one volatility out you direct advertising Did reported. you see a that advertising? brand war follow-up in versus time the and as out short-form through just monetization weakness in how for to of called globally gave we the Ukraine think should to question. versus 'XX, Other we then how for all have industry thinking brand longer the the of business on the YouTube, players performance response any And

Great.

the I'll start on impact. So revenue question and first

tragic say we're is. the important, doing as provide what is a humanitarian you think lot and from the I support. asking Google, both Sundar across was I a war And there. are and anything most else relevant Philipp said, crisis would this to that

we our the primarily XXXX, advertising. we of fact early was as Russia, terms to X% the is activities And suspended March. from announced most of majority revenues in Russia and direct In were question, your revenues, in commercial the that vast from impact Google that about in of

spend, particularly advertiser war, outset on In addition, was there in the pullback YouTube the from in Europe. of a

I couple respect a trends from over Philipp to the to And of with there. war. YouTube and impacts So guess

creator of as dig global, mentioned, over into countries, short-term which reward if we're Shorts Shorts. to Shorts ago. and a to little we a Sundar look maybe So went year take a means part the at Xx higher around now and XXX rolled deeper what billion fresh out creators their the your views, for monetize daily XX taking is to than view, questions it videos. has And

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And all could supporting like all, the creators we're monetization so actively in the to next mobile on on look and deeply generation committed very future. think in are I working YouTube of here what

JPMorgan. next comes And Doug from our from question Anmuth

have two. I

just advertising. on First,

Apple's that clear shifted about able iOS capture thinking industry Just dollars that privacy were social to conversations, some search from it changes. related pretty to you seems to

just past of spending on be dynamic in the if then, greater headcount those continue on margins dollars continued Just of in strong and all at And of with about think can to how if side, couple And Ruth, comment margin quarters. you even the terms the XQ. forward. at then you that XX% operating curious going of sustainability

and little able gain a you what the Just more and you hoping in you areas to business. on elaborate bit considered mean in could by offset efficiencies what investments are

the questions. for Thanks

there's to highlight. ATT, respect and to nothing with Search really So

of as year, haven't time, last what gradually I margins point as comments while would substantial last certain we're well the value the about margins there more our We continue worth to X a ongoing we terms growth in noticeable I expense And do out during both investing, how invest in is infrastructure. and a margin. expense opening affected margins to And respect to benefited we noted, talked And spend. aggressively investing year. we other a rapid year, from year talked margins, technical benefit investment at in XXXX, as in last made respects, clear focused long-term in that revenue as to thinking did that revenue from ongoing and for I And difference remain that terms of seen growth, then of we in shift as a I about on benefits timing say with described And ramped clip bit hiring about growth. same in overall growth were we tried year. make what plan calling between this at creation. do operating

revenue And than the to change growth year. given second lives a weighted The the the dollar. last here of last the really which as useful and is reminder, efforts I headwind operating strength U.S. our in called tailwind given first was it on greater has was of benefited a U.S. a the in exchange the is in is was of our income impact located most expenses R&D from exchange, U.S. base foreign that the the And but noted, year, expense year-on-year towards impact the with that last flipped on we impact out of year, the as foreign

key point, we is, in there view, thing long-term are make. that So on given the some investments the the key value focused to very And we're continuing creation. our see, we opportunities main are

from question from next Bank our Post And America of Lynch. comes Merrill Justin

things. A of couple

when about as then and Europe, that you later? activity. on First growth quite you a regulatory think we bit do couple guess been of ramp YouTube, little environment up, the on ramp try the about a secondly, Has the Shorts a for of And to monetization and that headwind other can about Digital lot of a in Market next years? headlines How evolution things. over there's and the Act you regulation think in

Thanks for the questions.

I a of YouTube, in terms are in of So your question. questions couple there think

response, deceleration relative In as an year-on-year strong in direct last noted lapping in the terms of quarter, exceptionally the year. first growth revenue the rate we the factor quarter to was largest

there to of worth a addition In couple direct noting. that other lapping, response were items

a impact war in as an commercial response. last noted the the in addition, we say revenue question, related relative a on your as outsized the spend to Then Russia headwind as activities by total primarily to headwind that the a of year. we're Shorts continue I the time. other our earlier, suspending growth I've that dollar as there's experience percentage we to as, then I've already Google. impact in in as vast already experiencing primarily headwind YouTube earnings grows well reduction direct of brand in viewership of from the majority consistent as of since And call, on. the did was And it of to both First, commented ATT quarter part Europe. on has FX advertisers the slight mentioned in mentioned, YouTube been have from from And would I ads ATT rest was April implemented third

gap testing YouTube monetization time. focused is the advertiser are closing and And early feedback encouraging. with We Shorts, results over on are on traditional ads and the team

Shorts, headwind. So we're slight but excited about the with new opportunities a

second a Look, are support goals, DMA to implementation understand DMA's -- the number but Obviously, the be over regulatory dialogue, it's including important, choice, the be On we expanded have deals about part be many we make of -- still to of done tell, including interoperability. regulation. and constructively, and will years. the question consumer working early progress. past We'll engaging too and as we we'll

from next our And comes ISI. question from Mark Evercore Mahaney

know prepared like numbers you like that the if stick, Ruth, look just in usage -- already you and does please, step at does That look has questions. and that mentioned some of back with I abated? softness comments. kind continuing? YouTube that's Or in Western Okay. overall I'll brand Europe, YouTube And that look

short-form including now, think, growth video, user? Just impact in growth overall much engagement array on seeing given in YouTube the broader are content video -- of you the long-form or users the and options, any overall I YouTube per in

every well I and the online of of Tragically, And businesses, So is years, I'd from engagement, investment over YouTube still we've -- at see war, as content we overall, creators on what creating grow. innovation. really think in are terms noted our pleased as billion YouTube fact too impact on positive. too and on past so does early is logged-in benefit a innovation viewers from there, the YouTube Broadly, early in we subscription team a the ongoing; X We with ton both it then single the to and there, focused continue comment of remain there. it's very first who are I question, people visit say, comment. active been And to think helping few month. There's video. innovating in YouTube's comment seen rate. advertising We're the performance that to there the significant terms business

the your That's has that XX said, views. than now to really daily I Shorts Xx year a about of seeing. think we're that activity billion As Sundar And ago. question higher goes level

comes And next our question Nathanson from Michael MoffettNathanson. from

know in may on type what been TikTok one mobile you meaningful other for demand big bit and to maybe talk emerging you want position. consumer of And quarter APAC then led one then but there's in of product and the quarter competitor it YouTube, mobile is APAC, region And slower shift concern about that of for you're you you can the any And have called anything on APAC? of shift it's the Shorts, YouTube Asia to out think of why there. softer? have any strength I seeing advertising to Or underperformed to call Ruth, any out have which Russia an I picture Ruth. product? odd if could if is TikTok? On because course, I Pacific we're a to there a that Is hearing a Ukraine at mobile YouTube, had look this that YouTube's because EMEA, quarter,

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views. You stats from on billion heard XX Sundar the the daily

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Yes.

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And comes our Thill next from Brent from question Jefferies.

most for the through Google you're on walk where leg rest just of growth, just Sundar, For next excited you 'XX. the of Cloud, could if

as my Workspace. lot earlier I'm excited key Thanks. it areas, Look, saw overall you well analytics, in because board, data of the remarks our a and as across across multicloud product Google innovation there's the open be cybersecurity,

overall innovation Cybersecurity we and which has great. been are seeing the at about will I lot to a the look a is, We overall, us of and there's our execution But focus. I acquisition customers particular as our serve Mandiant, when think obviously well. demand the has deeper early been definitely excited help So the product are to. in forward how look pipeline journey

well, play executing and well. view well. as out go-to-market think I taking as and our in time, think better. over particularly on up, that long-run converting to I play consumption And scaling focus well, bookings And scaling are a We will we it up out methodically as will

that's what I'm about. So excited

question our next Ju And from comes Credit from Stephen Suisse.

posting, about recently So help the rollout their of talked I money. a of of the management this India about your we to with as evolution can you desire your becomes it becomes more indispensable users you billion the more, to that and theoretically Search your block this about for user think released some talking ambitions hope base add service user Pay, next particularly your Google your team with talk Tez product? I in think time Sundar, the that and but hopefully, to service to last utility And so

everything and institution in And certainly merchant want what on really was works and making we've they is we about started. of can all think this Thanks, can Stephen. the work payment that have sure our connect maybe make We sure both been India for well. making side, the it work the easier, step strategy to on and customers payments that well. commerce strategy Obviously, overall. you mentioned to One, back financial focused the with as got very the you similar

examples and over on ability then Google And all, out Simple easy we're for to parking people voice new are rolled of digital we just users first making questions -- saw We across XXX about innovate now Google across with XX works we countries their are Pay board, time, experiences. sure works Pay. pay all use Assistant. build will you -- for sites. million to the was for Google using well, using the And it your making the

the focused making sure for So will features. for the really world. on then definitely for simplicity. first well users time, helpful on it additional over we part layer And as across But building scale, now, are we building many works

the from Salmon Dan of line question our And comes from BMO. last

I have X questions.

for you'll a product the like and next version version to and your for of Analytics, First, important of tool ongoing older the That's a year where always begin I'd there's sunsetting been now about ask measure where new impact or the year. advertisers a so Google advertising. really transition to to a publishers

about more transition? not may could one how second, may cookies Chrome then changes, one a to and last on how YouTube. And the deprecation be or related So you its smooth us plan they you little tell of in to ensure those bit

the highlight that that mentioned in strong You performance Ruth. you driving are that strength would products Any particular? subscriptions, in

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Our partners are happy about it.

yes, So this a is We this -- is one. nice it. like

And then in terms of the businesses. subscription YouTube

YouTube was and subscriber as growth, YouTube Premium. I deliver by well both they growth continue substantial as Music to and that revenue As for said, driven TV

we're what with pleased there. So seeing

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

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

This disconnect. you. for and you today's participating, Thank call. you conference concludes may now Thank