Alphabet (GOOG) 2 Feb 232022 Q4 Earnings call transcript

Welcome, everyone. Thank you for standing by for the Alphabet Fourth Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

to Friedland, conference Director like speaker to now Jim today, of would hand over the your I Investor Relations. ahead. go Please,

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

quickly I'll safe harbor. Now, the cover

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

For to in more the risk our Form year the forms our with the XX-K including please filed ended information, refer XXXX. factors December filing for XX-K discussed and SEC, XX, upcoming XX-Q

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

will otherwise. comparisons be unless Our year-over-year state we on comments

And Sundar. now, I’ll turn to the call over

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drive to YouTube's will Ticket new that experiences opportunities viewers and and ad-supported helping new to subscriptions, YouTube's creators. bring by accelerate for Sunday paid NFL create

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pullbacks growth. spend investing to in broadly revenue year-over-year where long-term of quarter. the more Network, see opportunities clear and were zoom a and YouTube now advertiser due we're the in share for broadening to In fourth declines out I'll

recognize revenues mobile. has outsized the revenues the advertising higher decade pandemic, that growth XXXX. It's $XX in billion recently, in advertising Google during transition from than More benefited business advertising First, over the past XXXX to with to AI. important we our obviously had

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average uplift from SSC a see PMax. on advertisers First, to XX%

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YouTube's in on Despite we're trajectory. to Moving ongoing headwinds confident YouTube. revenue in QX, long-term

think of the Here's strategy. our all are YouTube. starts we a creator Creators It how about lifeblood ecosystem. with

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Ruth, over you. to

Thank Philipp. you,

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we in the from the given the faced recovery tough impact of outsized very First, pandemic. comps, XXXX

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Within Google growth. Services, we revenue are see for long-term in focused opportunities on investing we the

and and First, deliver well focused for as AI compelling higher more to using and we to content creative as ROI tools advertisers. within experiences for on search, are better in advances drive new advertising, to users measurement, better

initiatives other across YouTube, while growth our working engagement in ad-supported continued are prioritizing Shorts monetization, on products. we also In and

impact the user pandemic reflected during the exchange, for As Play, the and in other reductions uplift introduced. from the impact lapping XXXX activity to from the foreign outlook sizable fee results revenues, we particularly our in

remain prospects Premium, while across particularly working across cautious to YouTube Music we We optimistic investments, building the Primetime remain longer In innovation drive focus TV although about and on about to to YouTube and for portfolio. With trends. subscriptions, support YouTube optimistic and continue near mobile term, sizable apps family, term we're Channels. make the more across industry our Pixel given efficiencies momentum gaming, greater its hardware, cost

digital excited opportunity transformation to Enterprises Google For the market we turning the Cloud, their us and verticals long-term of business. about are initiatives and geographies. trajectory across for the and governments remain increasingly

While very to Google on growth, focused remain investing Cloud's path profitability. for we

Other terms as reflect DeepMind Sundar financial will we in will will a be Bets change DeepMind. reported corporate Google Bets, mentioned, making the costs. be Other be quarter, part longer no Cloud To first relates it reported as collaboration increasing Google In Alphabet's of with Bets, of reporting Services, beginning and Other to as and DeepMind in the

I'll pace the our of elements in expense to a deliver of you reengineering now the base of to our through walk efforts growth. order slow operating key cost durable

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to headcount expect in with incur space of first reflected million align quarter leases our This the costs. costs our In to related approximately to global exiting corporate look. be $XXX adjusted XXXX, will office we of

to We estate optimize will our footprint. continue real

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Philipp Sundar, questions. you. your will I Thank now and take

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

open. is line Your

I the we first are potential potentially impact guess, about I Thanks about AI all first the years? for of I compute is, one of come. two, AI and tools to sort over my questions. appreciate cost on the come, and taking higher think intensity the AI. color how couple the to all that question next have should of of AI CapEx the the these around impacting margins tools

I in underway those efforts what about potential one, really appreciate should see over of XXXX And of conversation the through think improve P&L Thanks. then we second could any sizes about Have to types that of the in you and impacts the efficiency. Ruth, efforts How of long-term period? savings we roll sort run XXXX?

Thanks for the question.

question AI your CapEx. So and starting on about

more Sundar Max I more already It products, users, and also for Bidding Performance As think AI for advertisers. our like opens and creators, incorporated is Philipp Cloud, products our for both is of many products services as said. but Sundar many and up and in compute-intensive, noted, Smart

and supply That being cost we're and optimizing across on data further very compute, of chain. center, servers that's focused elements, our all said, the

return to invest a on lens keen on the So with capital. we're that continuing

comments, be investments in not in going XXXX, for technical across support well. line the with AI. do in shift. And in we indicated we're Alphabet, office decreasing And opening XXXX that's an CapEx we to our for when in as facilities. CapEx infrastructure. important I And time, our expect look for increasing as That's same to We're with at at mix investments Cloud meaningfully just generally it's particular

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in because upside process durable to continue they items, why we in on continuing see that take We now, through go base. if execute. longer noted are time, flight, They're them. on the themselves XXXX an XXXX. that But would that added build we and work we're you and work you our to I impact the they streams through want through on than be indicated to to improvements to of have we provide as expense focused continue implement, that's more go is to And focused we in which and

Great. Thanks, Ruth.

our And Nathanson from next comes question Michael with MoffettNathanson.

Thanks. two. I have

Sundar what For is NFL you've factors? you've so quickly to the be sports monetizable the this the remarks and Is sticky And help some it Philipp, this in critical both Can the you why do What's you So really of define, bring important opens are a the so the many see more is that help about Philipp, monetization, and in you wonder to scaling NFL? us seen mentioned and said your the comment opportunities make just, up. that YouTube to taking Thank to deals us, anything product? terms advertisers the Why solved Shorts. have is past it in this longer-term on? to of I you? you. just first had? then things the you What time you've of opportunity?

in for as Yeah. opportunities viewer, to is lot unique the interested is our and basically and actually NFL offering fans. have Primetime is differentiate will the YouTube access can first available Sunday of Thank with a that of offering to the Ticket means now every experience, that, time Channels. Sunday We Ticket, subscription, user full a think add-on on as creator TV stand-alone YouTube you much who la capabilities. It question. be one-click package great a This for carte there so the the an on

we'll once. screens ability multiple to for building watch On adding to, subscribers so comments, YouTube Sunday features we're specific new chats, like TV, and for the Ticket CTV, on And experience YouTube example, at the be polls, on.

NFL side, innovative access more. create creator long-form, ways and and imagine see, to And on. shorts, streams what with event excited do the really exclusive all they so content, behind-the-scenes can across they'll live the On we're

with growing viewership for a of the progress attention as from question, I a to. build still side, great the between creator as Closing Shorts Shorts monetization. up second user spring. long-form billion in your is daily is last on continuing rapidly, earlier, gap and us, pleased paying said of a billion-plus continuing XX big On is, XX and We're we're views, experience, to which priority lot our course,

As the are you on of a sign bit progress. Shorts gives it a now available, for

action, app product Performance discovery, also the shorts to where content, we're multiple via and forms creators and feed at And are only video can across across shoppable. have screens Max multiple campaigns really all again, We formats, destination produce ways a with of multiple YouTube that's Program. make Shorts to is what to revenue sharing shared our for And Shorts goal best brought just yesterday, and we our Sundar living. the our Partner place YouTube via And Ultimately, moment. focus is the make really creators.

And our next question comes from Douglas Anmuth with JPMorgan.

Your line open. is

for One Sundar Ruth. for Thanks the one questions. for taking and

how bring or can to you sacrificing the principles about trust For products the of about and talked you talk kind and that integrity can can AI do more along without market way? you just quality that you Sundar, with the how

along clearly, we've the with all everything past. in what Ruth, it to than us Is heard these way you're different cost there went the and structure way durable then, that a help the And efforts? any around Thanks. quantify is how at in thinking language reengineering about

Thanks, Doug.

side, AI the time. it really a On exciting is

ready. think is a that for while, in Consumers experiences. the new and market out it's are we've I interested investing clear been trying

feel And we making sure we careful. responsibly. AI I in develop comfortable think made be with all can we'll the have I investments

better, to serving is cases, -- keep will just we're products we will so we’ll in costs labs need improved. getting launching and certain Obviously, The cases certain there. changing. models sure iterating make features fast -- as be in slowly in be We'll public, more from beta need to scaling the these field up

experiences, it terms like always from So as putting very, iterate experiences, actually early APIs experiences our in of LLM direct but we've and both are bringing developers and products there days, and Search, I in learn committed view and done. new very enterprises for we making to available

it. looking I'm forward So to

being revenue And the about durable revenue ensure on then your base invest focused to focused of And on means growing as value, on obviously we to that when talk that financial in changes that be cannot expense growth we're really ahead we sustainable growth. well as growth. second to capacity question, the expense delivering have upside,

growth, within product the AI ahead of emphasis talked and broadly, across as Google a more are of us experience. areas. search all lot ROI key we've that there's advancements revenue improving about user clearly, the exciting the the that's And Services, And advertiser of

can’t durably and growth, expense And Alphabet. then the importantly, keep benefit that we commitment of reengineer to, will emphasizing, across on our segments a very have very cost we strong base, all

key as the slowing improving starting and product hiring hardware on the a the we efficiency using productivity in And line as operational we automation as to point, of as pace said, work for for improve the have a across structure, key, where Google, AI Pixel Sundar focus number well is of as prioritization intently technical of components, economics tasks, and cost then streams. our infrastructure,

then you estate of as we work, our with growth. Managing given the where saw real and vendors headcount and that said, and with consolidation, how and spend, suppliers part I optimizing the slower

similarly Alphabet. those only greater All benefit many efficiency across drive Google of Services, of not those but

then the Cloud, on focused And focused on path in That's Bets, And driver. sustainably. we remain profitability. as said, revenue so, Other similarly margin a and we've investing to very with we're

where then ongoing. some run the start of in benefit full talked that's of that XXXX. of see to run rate get it in really to change is work work and why year it, this XXXX the we've but in to it's back And emphasized ongoing, here go comes so, and the rate about elements really notion in is you the there impacting durable to it, of And I've see nature you

Thank helpful. both. That’s you,

Goldman Our from Eric next Sheridan of question Sachs. is

Your line is open.

two, much. so years? about and the the you've do continuing being disruptive looking over right I made you between the you, lot how on to going of see potentially for the AI your the arc yourself all the couple versus last that set that Sundar, user set five-plus striking I/Os think think about the you balance monetization over the in in back experience capturing a if we've talking of Maybe next front to years of you and product when Thank given opportunity forward about existing or could. theme, disrupt the investments you, set philosophically Google you been opportunity

sets improvement some this on the quarter. sort some And of the debates then, the rationalization cost looking an cost questions term? what structure. we Bets the Cloud area when division should Thanks with outside losses aligning about opportunity to the the Obviously, from But Ruth, be of the costs Other in. in for where Alphabet maybe on the to continue divisions much. than be you just us showed medium of in think of think of then and How and some is some you structure higher across losses the following so long the of thinking

think, made do I had technology but Look, of getting such all, already first investing Eric. it We research, Thanks, we been in of scale-ready. actually terms and we've all not a deployed. foundational just production

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question Our Barclays. is with from next Ross Sandler

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Our with next Mark comes Evercore from question Mahaney ISI.

Your line is open.

talk times, how to one a couple getting profitability. Cloud Hey done. mentioned question I'll Ruth, you that gets of just on, ask And through Google just

stayed You level The the had XXXX, from the growth Cloud. same there. operating loss Google XXXX XX% almost to growth is so about in

years? the out be segment solved show in Thank of AWS anywhere to are what that get to Azure sort What you. factors akin need able order to that have been profitability of pretty and nice to over the

the for question. Thanks

talked we've support the given the of ahead Cloud, investing the opportunity segments our able been ensure really around overall we've globe. equipped, with calls, desire across prior to on revenues, to the as about Google and we're that and growth So, customers

the And momentum to really deliver. position so investment have team to been continued ourselves the that to meaningful has there's

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now on we've for continue the we working through profitability where growth a closed to this march to gap we're at as our to are position narrowing is And invest profitability. while still what meaningfully but

you, Thank Ruth.

comes Thill question with Jefferies. And our last from Brent

open. line is Your

of over any of Good patterns afternoon, Ruth, can give color Can just the in Is year? you of terms sense you're you this you QX? than year seasonal how month historic? any give one a more into observing in us us you're seeing different Are this what quarter? little a framing

revenue we don't you the rates. know to we within is well to which run as as we and there overall give -- context that What growth priorities the the how So at don't as think exit to returns. well, tend expense our to provide tried you approaching deliver I upside business looking reengineer we and base do levers attractive we're we're have the as

not across to really heard that discussed. So continuing comments the today, of and add much to to we you've we're one the elements each execute

Thank you.

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

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

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

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