This notebook will walk you through the data upload process and get you up and running quickly with the Sturdy Statistics API. We will upload a We will create a series of visualization to explore past year of Earnings Calls from Google. Earnings Calls are a quarterly event during which a public company will discuss the results of the past quarter and take questions from its investors.
The data is stored as code inline in the notebook for maximum visibility. You can sign up on our website to generate your free, no payment info required, API key to run this notebook yourself and to replace our demo dataset with your own data for analysis.
pip install sturdy-stats-sdk pandas numpy plotly
# pip install sturdy-stats-sdk pandas numpy plotly duckdb
from IPython.display import display, Markdown, Latex
import pandas as pd
import numpy as np
import plotly.express as px
from sturdystats import Index, Job
from pprint import pprint## Basic Utilities
px.defaults.template = "simple_white" # Change the template
px.defaults.color_discrete_sequence = px.colors.qualitative.Dark24 # Change color sequence
def procFig(fig, **kwargs):
fig.update_layout(plot_bgcolor= "rgba(0, 0, 0, 0)", paper_bgcolor= "rgba(0, 0, 0, 0)",
margin=dict(l=0,r=0,b=0,t=30,pad=0),
**kwargs
)
fig.layout.xaxis.fixedrange = True
fig.layout.yaxis.fixedrange = True
return fig
def displayText(df, highlight):
def processText(row):
t = "\n".join([ f'1. {r["short_title"]}: {int(r["prevalence"]*100)}%' for r in row["paragraph_topics"][:5] ])
x = row["text"].replace("*", "").replace("$", "")
res = []
for word in x.split(" "):
for term in highlight:
if term.lower() in word.lower() and "**" not in word:
word = "**"+word+"**"
res.append(word)
return f"<em>\n\n#### Result {row.name+1}/{df.index.max()+1}\n\n##### {row['ticker']} {row['pub_quarter']}\n\n"+ t +"\n\n" + " ".join(res) + "</em>"
res = df.apply(processText, axis=1).tolist()
display(Markdown(f"\n\n...\n\n".join(res)))The basic unit for Sturdy Statistics workflows is the index. An index stores your data, indexes it for search, and allows you to query your data using SQL. An index also allows you to train our machine learning models for more sophisticated analysis.
Indexes are private to your API key, and each index associated with your API key has a unique name and a unique identifier known as the index_id. For this demo, we’ll go ahead and make a new index with the name Earnings-Calls-Demo. We add a UUID to make this notebook reproducable if rerun.
from uuid import uuid4
index = Index(name = "Earnings-Calls-Demo-"+str(uuid4()))
index.get_status()Created new index with id="index_0f8c9d42e7694faea302d458f84b179c".{'id': 'index_0f8c9d42e7694faea302d458f84b179c',
'name': 'Earnings-Calls-Demo-223b5452-309f-4bda-b83e-da5754835d37',
'state': 'untrained',
'stored_bytes': 0,
'creation_timestamp': 'Thu, 03 Apr 2025 20:53:35 GMT',
'organization_id': 'a03b2006-9505-40d4-aa35-684b64eb52b5',
'last_commit_timestamp': None,
'last_training_timestamp': None}We are storing the data inline in the folded cell below. We convert the list of records into a dataframe. We can see that we have stored the ticker, quarter, year and publication date of each earning call.
data = [{'ticker': 'GOOG',
'quarter': '2023Q4',
'pub_quarter': '2024Q1',
'year': 2023,
'full_content': "Operator: Welcome, everyone. Thank you for standing by for the Alphabet Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] \n I would now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead. \nJames Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's Fourth Quarter 2023 Earnings Conference Call. With us today are Sundar Pichai, Philipp Schindler and Ruth Porat. \n Now I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors discussed in our upcoming Form 10-K filing for the year ended December 31, 2023. We undertake no obligation to update any forward-looking statement. \n During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. \n And now I'll turn the call over to Sundar. \nSundar Pichai: Hello, everyone. Our results reflect strong momentum and product innovation continuing into 2024. Today, I'm going to talk about four main topics. One, our investments in AI, including how it's helping Search; two, subscriptions, which reached $15 billion in annual revenue, up 5x since 2019. Subscriptions is growing strongly powered by YouTube Premium and Music, YouTube TV and Google One. Three, Cloud, which crossed $9 billion in revenues this quarter and saw accelerated growth driven by our GenAI and product leadership; and four, our investments and focus to meet the growth opportunities ahead. \n First, AI and Search. As you know, we have long led the way in using AI to improve many of our products from Search to Ads to most of our consumer and enterprise products, helping billions of people already. Last year brought new excitement around GenAI, and I'm proud of how we responded responsibly with deep advances in foundation models and a number of great launches. \n We closed the year by launching the Gemini era, a new industry-leading series of models that will fuel the next generation of advances. Gemini is the first realization of the vision we had when we formed Google DeepMind, bringing together our 2 world-class research teams. It's engineered to understand and combine text, images, audio, video and code in a natively multimodal way, and it can run on everything from mobile devices to data centers. \n Gemini gives us a great foundation. It's already demonstrating state-of-the-art capabilities, and it's only going to get better. Gemini Ultra is coming soon. The team is already working on the next versions and bringing it to our products. \n That starts with Search. We are already experimenting with Gemini in Search, where it's making our Search Generative Experience, or SGE, faster for users. We have seen a 40% reduction in latency in English in the U.S. I'm happy with what we are seeing in the earliest days of SGE. It's available through Search Labs in 7 languages. \n By applying generative AI to Search, we are able to serve a wider range of information needs and answer new types of questions, including those that benefit from multiple perspectives. People are finding it particularly useful for more complex questions like comparisons or longer queries. It's also helpful in areas where people are looking for deeper understanding, such as education or even gift ideas. \n We are improving satisfaction, including answers for more conversational and intricate queries. As I mentioned earlier, we are surfacing more links with SGE and linking to a wider range of sources on the results page, and we'll continue to prioritize approaches that add value for our users and send valuable traffic to publishers. \n Beyond SGE, we are continuing to use AI to make searching more accessible and intuitive. Circle to Search lets you search what you see on Android phones with a simple gesture without switching apps. It's available starting this week on Pixel 8 and Pixel 8 Pro and the new Samsung Galaxy S24 Series. \n And Lens now offers generative AI overviews. You can add text to a visual search to ask questions about anything you see and get AI-powered insights in the moment. In addition to Search, we are also seeing a lot of interest in our AI-powered solutions for advertisers. That includes our new conversational experience that uses Gemini to accelerate the creation of Search campaigns. \n Then there is Bard, our conversational AI tool that complements Search. It's now powered by Gemini Pro and is much more capable at things like understanding, summarizing, reasoning, coding and planning. It's now in over 40 languages and over 230 countries around the world. Looking ahead, we'll be rolling out an even more advanced version for subscribers powered by Gemini Ultra. \n That's a good segue to subscriptions. As I said earlier, it's now a $15 billion business annually. YouTube is the key driver of our subscription revenues. Available in over 100 countries and regions, YouTube Music and Premium have real momentum. They're engaging passionate users and driving great returns for the music industry and creators. \n YouTube TV is also doing well. We've had great consumer feedback on the viewing experience. People love the navigation, multiview and unlimited DVR. NFL Sunday Ticket has found its perfect home on YouTube, and Philipp will talk about that more. \n Let me also talk about our subscription service, Google One. It's doing incredibly well with strong user growth. It provides expanded storage, unlocks exclusive features in Google products and allows us to build a strong relationship with our most engaged users. Google One is growing very well, and we are just about to cross 100 million subscribers. From here, we are going to bring in more AI features and look forward to more strong growth to come. \n Next, Google Cloud. Throughout 2023, we introduced thousands of product advances, including broad GenAI capabilities across our AI infrastructure, our Vertex AI platform and our new Duet AI agents. In Q4, our product and GenAI leadership enabled us to win and expand relationships with many leading brands, including Hugging Face, McDonald's, Motorola Mobility and Verizon. \n Google Cloud offers our AI Hypercomputer, a groundbreaking supercomputing architecture that combines our powerful TPUs and GPUs, AI software and multi-slice and multi-host technology to provide performance and cost advantages for training and serving models. Customers like Anthropic, Character.AI, Essential AI and Mistral AI are building and serving models on it. \n For developers building GenAI applications, we offer Vertex AI, a comprehensive enterprise AI platform. It helps customers like Deutsche Telekom and Moody's discover, customize, augment and deploy over 130 GenAI models, including PaLM, MedPaLM, Sec-PaLM and Gemini as well as popular open source and partner models. Vertex AI has seen strong adoption with the API request increasing nearly 6x from H1 to H2 last year. \n Using Vertex AI, Samsung recently announced its Galaxy S24 Series smartphone with Gemini and Imagen 2, our advanced text-to-image model. Shutterstock has added Imagen 2 to their AI image generator, enabling users to turn simple text prompts into unique visuals. And Victoria's Secret & Co. will look to personalize and improve the customer experience with Gemini, Vertex AI, Search and Conversations. \n Customers are increasingly choosing Duet AI, our packaged AI agents for Google Workspace and Google Cloud Platform, to boost productivity and improve their operations. Since its launch, thousands of companies and more than 1 million trusted testers have used Duet AI. It will incorporate Gemini soon. \n In Workspace, Duet AI is helping employees benefit from improved productivity and creativity at thousands of paying customers around the world, including Singapore Post, Uber and Woolworths. In Google Cloud Platform, Duet AI assists software developers and cybersecurity analysts. Duet AI for Developers is the only GenAI offering to support the complete development and operations life cycle, fine-tuned with the customer's own core purpose and policies. It's helping Wayfair, GE Appliances and Commerzbank write better software, faster with AI code completion, code generation and chat support. With Duet AI and Security Operations, we are helping cybersecurity teams at Fiserv, Spotify and Pfizer. \n Our robust growth has been driven by strong direct and indirect channels. With ISVs, we have nearly tripled the number of co-sell deals from 2022 to 2023. In our ecosystem, there are nearly 90,000 Google Cloud GenAI-enabled consultants. And Accenture has teamed up with Google Cloud to create a joint generative AI center of excellence. \n Next, let me turn to our focus and discipline as we pursue the opportunities ahead. Search, YouTube and Cloud are supported by our state-of-the-art compute infrastructure. This infrastructure is also key to realizing our big AI ambitions. It's a major differentiator for us. We continue to invest responsibly in our data centers and compute to support this new wave of growth in AI-powered services for us and for our customers. Through this, we are being disciplined in how we run the company. \n You've heard me talk about our efforts to durably reengineer our cost base and to improve our velocity and efficiency. That work continues. Teams are working to focus on key priorities and execute fast, removing layers and simplifying their organizational structures. As just one example, our devices team has brought together different teams from across Nest, Fitbit and other teams into a new functional structure. This will help us pull resources and drive progress across our Pixel portfolio. Across different teams, we have wound down some nonpriority projects, which will help us invest and operate well in our growth areas. \n We are also improving our machine utilization, building on our years of experience in driving cost efficiencies in our computing infrastructure and operations. And through our supplier efficiency efforts and automation of certain processes, we have made major improvements in areas like procurement, achieving significant savings. \n That's a snapshot of the quarter. Before I close, a couple of other highlights. Pixel 8, our AI-first phone, was awarded Phone of the Year by numerous outlets. It now uses Gemini Nano with features like Magic Compose for Google Messages and more to come. \n In our Other Bets portfolio of companies, Waymo, which is deeply focused on safety, reached over 1 million fully autonomous ride-hailing trips. And Isomorphic Labs entered into strategic partnerships with Eli Lilly and Novartis to apply AI to treat diseases, which has great potential. \n 2023 was a year of profound innovation and product momentum. Thank you to our many partners. We succeed when our partners do, and we are grateful for the work we do together. From our partners across the Android ecosystem who are on display at CES to our deep relationships with retailers, small businesses and advertising partners, to the next generation of AI start-ups and developers and many more. I also want to thank all of our employees for their hard work throughout 2023 and the start of the new year. I'm excited for what's ahead in 2024. Philipp? \nPhilipp Schindler: Thanks, Sundar, and hi, everyone. Google Services revenues of $76 billion were up 12% year-on-year. In Google advertising, Search and other revenues grew 13% year-on-year, led again by solid growth in the retail vertical. We had particular strength in retail in APAC, a trend that began in the second quarter of 2023 and continued through the end of the year. \n YouTube ads revenue were up 16% year-on-year driven by growth in both direct response and brand. And network revenues declined 2% year-on-year. In subscriptions, platforms and devices, which was previously named Google Other, year-on-year revenues increased 23% driven by strong growth in subscriptions. \n Now for some color on the quarter and where we see continued upside for long-term advertising growth. Over the last few calls, I have consistently highlighted how we're putting Google AI to work for our customers to deliver profitability and help them achieve their goals in a do-more-with-less environment. \n From a product perspective, in Q4, Performance Max remained a bright spot. We're also excited about demand gen momentum. This is our big bet to help social advertisers find and convert consumers via immersive, relevant visual creatives across YouTube, including YouTube Shorts, Gmail and Discover. In a single campaign, you get access to over 3 billion users as they stream, scroll, connect and decide what to buy. Tens of thousands of advertisers are testing and on average seeing 6% more conversions per dollar versus image-only ads and discovery campaigns. \n As we look ahead, we're also starting to put generative AI in the hands of more and more businesses to help them build better campaigns and even better performing ads. Automatically created assets help advertisers show more relevant search ads by creating tailored headlines and descriptions based on each ad's context. Adoption was up with strong feedback in Q4. In addition to now being available in 8 languages, more advanced GenAI-powered capabilities are coming to ACA. \n And then last week's big news was that Gemini will power new conversational experience in Google Ads. This is open and beta to U.S. and U.K. advertisers. Early tests show advertisers are building higher-quality search campaigns with less effort, especially SMBs who are 42% more likely to publish a campaign with good or excellent ad strength. We can't wait to see how this continues to drive performance and level the playing field for advertisers of all sizes. \n As we shared last quarter, Ads will continue to play an important role in the new search experience, and we'll continue to experiment with new formats native to SGE. SGE is creating new opportunities for us to improve commercial journeys for people by showing relevant ads alongside search results. We've also found that people are finding ads either above or below the AI-powered overview helpful as they provide useful options for people to take action and connect with businesses. \n Looking at our strong Search performance for the fourth quarter. Retail was a highlight. We continue to see a stronger start to the season up to and including Cyber Five. In Q3, we indicated that we were seeing early trends of consumers being very price-conscious, and we saw this play out in Q4. With promotional demand at an all-time high, deal seekers using Google had access to 2x the deals in the U.S. versus last season as well as a better shopping experience. Launches included a one-stop shop deals destination, new filters like [ Get it Fast ] and AI-generated gifting recommendations in SGE. These new features drove incremental query growth during key shopping moments like Cyber Five. \n Our proven AI-powered ad solutions were also a win for retailers looking to accelerate omni growth and capture holiday demand. Quick examples include a large U.S. big-box retailer who drove a 60%-plus increase in omni ROAS and a 22%-plus increase in store traffic using Performance Max during Cyber Five; and a well-known global fashion brand, who drove a 15%-plus higher omnichannel conversion rate versus regular shopping traffic by showcasing its store pickup offering across top markets through pickup later on shopping ads. \n Moving on to YouTube. We're obviously pleased with YouTube's advertising revenue growth in Q4 and also significant growth in our subscription revenue. I'll reiterate what I have said before: YouTube's success starts with creator success. We give millions of creators more ways to create content and connect with fans and more ways to make money and build their own businesses than any other platform. More creators means more content, which leads to more viewers. And via ads and subscriptions, these viewers fund our creators and drive the eyeballs and engagement our advertisers want. \n To keep this momentum going, we're focused on delivering value across 4 pillars: creation, viewers, monetization and responsibility. First, creation, which increasingly takes place on mobile devices. We've invested in a full suite of tools, including our new YouTube Create app for Shorts, to help people make everything from 15-second Shorts to 15-minute videos to 15-hour live streams with a production studio in the palm of their hands. \n GenAI is supercharging these capabilities. Anyone with a phone can swap in a new backdrop, remove background extras, translate their video into dozens of languages, all without a big studio budget. We're excited about our first products in this area from Dream Screen for AI-generated backgrounds to Aloud for AI-powered dubbing. There is more to come. \n Number two, viewers. We continue to grow watch time across YouTube with strong growth in Shorts and connected TV. Shorts remains a top priority. We have 2 billion-plus logged-in users every month, and we are averaging 70 billion in daily views. Connected TVs, or what we refer to as the living room, is where viewership is growing the fastest. We're investing to make this experience even better with interactive features tailored to TVs, plus the content people love: our creators, NFL Sunday Ticket and the range of live sports and studio content via YouTube TV and Primetime Channels. Put this all together and YouTube is the must-have app on every connected TV. \n Monetization is pillar #3 and realized through a combination of ad-supported and subscription offerings. Advertising generates the bulk of our revenue, and we continue to invest heavily here. We've rolled out CTV-first formats like 30-second nonskippable ads and pause experiences as well as an industry-first send-to-phone experience that lets people use a second screen to engage with ads. \n For Shorts, we've developed new formats that are less interruptive to viewers. It's early. We're learning but excited by the opportunities for ads this can unlock. Shorts monetization continues to progress nicely. \n Our AI-powered video formats from video reach and video view campaigns to demand gen and video action continue to make advertiser dollars go further and drive results across the funnel. We're also introducing new and existing advertisers to YouTube via sports content. 90-plus upfront and scatter advertisers, including Unilever, are partnering with YouTube in our first year across NFL Sunday Ticket in-game advertising opportunities. \n Our subscription offerings are also growing at a healthy clip. YouTube Music and Premium performed well. Premium users are delivering more value to our partners and YouTube than even ad-supported users do. On average, each additional Premium sign-up boost earnings for creators, music and media partners and YouTube itself. And we've made Premium even more attractive with new features, bundles and other enhancements. \n We're also pleased with our first season of NFL Sunday Ticket. It gave creators new opportunities to create content and feed user engagement across traditional user content and professional sports content. Feedback on the user experience, including multiview, has been great. We're excited to continue to innovate here. \n Responsibility is our fourth pillar, and it underlines everything we do across YouTube. We continue to focus relentlessly on this. As always, deepening our relationships with key partners to bring them the best of Google is a key priority for us, and we continue to do this across industries in Q4. \n We just talked about the NFL. Sundar mentioned Samsung, among others earlier. Another highlight was our expanded partnership with Porsche to enhance customers' digital experiences with a deeper in-vehicle integration of Google built-in services, including Google Maps and Play. Whether it's continued collaboration with our partners and key ecosystems, we're putting Google AI to work for more customers. I'm excited about the opportunities for continued impact in 2024. \n I'll wrap with a huge note of gratitude to our customers and partners. Our success is only possible because of their success and then to our Googlers for their outstanding work and focus this year. \n Ruth, over to you. \nRuth Porat: Thank you, Philipp. We are very pleased with our full year results with 2023 Alphabet revenues of $307 billion, up 9% versus 2022, which added $25 billion to revenues for the year. We ended with a strong fourth quarter with consolidated revenues of $86.3 billion, up 13% versus last year in both reported and constant currency. \n Search remained the largest contributor to revenue growth. My comments will be on year-over-year comparisons for the fourth quarter, unless I state otherwise. \n Total cost of revenues was $37.6 billion, up 6%. Other cost of revenues was $23.6 billion, up 5%, with the increase driven primarily by content acquisition costs associated with YouTube subscription offerings. The growth rate also reflects the offsetting benefit of lapping $1.2 billion in inventory-related charges that we called out in the fourth quarter last year as well as a reduction in depreciation expense due to changes in estimated useful lives we made starting in the first quarter of 2023. \n In terms of total expenses, the year-on-year comparisons reflect an additional $1.2 billion in exit charges that we took in the fourth quarter of 2023 in connection with actions to optimize our global office space. As you can see in our earnings release, these charges were allocated across the expense lines in other cost of revenues and OpEx based on associated head count. \n Operating expenses were $25 billion, up 11%, primarily reflecting an increase in R&D expenses, which were driven by the real estate charges, followed by compensation. Operating income was $23.7 billion, up 30%, and our operating margin was 27%. Net income was $20.7 billion, and EPS was $1.64. We delivered free cash flow of $7.9 billion, which was affected by the timing of the $10.5 billion tax payment we made on October 16 that we called out previously related to the deferral of certain tax payments to the fourth quarter. \n For the full year 2023, free cash flow was $69 billion. We repurchased a total of $62 billion of our Class A and Class C shares in 2023 and ended the year with $111 billion in cash and marketable securities. \n Turning to segment results. Within Google Services, revenues were $76.3 billion, up 12%. Google Search and other advertising revenues of $48 billion in the quarter were up 13%, led again by growth in retail. YouTube advertising revenues of $9.2 billion were up 16% driven by both direct response and brand advertising. Network advertising revenues of $8.3 billion were down 2%. \n Subscriptions, platforms and devices revenues, which we previously referred to as other revenues, were $10.8 billion, up 23%, primarily reflecting growth in YouTube subscription revenues. TAC was $14 billion, up 8%. Google Services' operating income was $26.7 billion, up 32%, and the operating margin was 35%. \n Turning to the Google Cloud segment. Revenues were $9.2 billion for the quarter, up 26%. We're very pleased with the momentum of GCP with an increasing contribution from AI. Google Workspace also delivered strong revenue growth primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $864 million and an operating margin of 9%. \n As to our Other Bets, for the full year 2023, revenues were $1.5 billion and the operating loss was $4.1 billion. Results in the fourth quarter benefited from a milestone payment in one of the Other Bets. \n Turning to our outlook for the business. With respect to Google Services, first, within advertising. We were pleased with the sequential revenue growth of Search and YouTube advertising throughout 2023, which reflects the extraordinary work across our teams to drive improved experiences for users and attractive ROI for advertisers. As we enter 2024 with advertising revenues of more than $100 billion higher than 2019, we remain focused on sustaining healthy growth on this larger base. \n Second, within subscriptions, platforms and devices, our total revenues from subscription products reached $15 billion for the full year 2023 driven primarily by substantial growth in subscribers for our YouTube subscription offerings. The substantial increase in our subscription revenues over the past few years demonstrates the ability of our teams to deliver high value-add offerings and provides a strong base on which to build, including through YouTube and newer services like Google One. \n Play had solid growth again in the fourth quarter driven primarily by an increase in the number of buyers. In devices, we continue to make sizable investments with increased emphasis on our Pixel family, particularly with AI-powered innovation while driving further efficiencies across the portfolio. \n Turning to Google Cloud. We are pleased with operating performance in the year. Full year revenues of $33 billion were up 26% versus prior year, ending with strong Q4 performance. The Cloud team is intensely focused on bringing the benefits of Gemini, our industry-leading AI technology, to enterprises and governments globally, and we are gratified with the level of engagement. The strong demand we are seeing for our vertically integrated AI portfolio is creating new opportunities for Google Cloud across every product area. \n In terms of profitability, the improvement in 2023 reflects sustained focus across the team with the intent to maintain healthy profitability while we continue to invest to support long-term growth. \n Turning to margins and expenses. As we have repeatedly stressed, we remain committed to our framework to durably reengineer our cost base as we invest to support our growth priorities. Key contributors to moderating our expense growth include: first, product and process prioritization to ensure we have the right resources behind our most important opportunities and to reallocate resources where we can; second, organizational efficiency and structure. We're focused on removing layers to simplify execution and drive velocity. \n Both product prioritization and the organization design efforts result in a slower pace of hiring, as you can see with our head count down year-on-year, reflecting the reductions we announced in the first quarter of 2023 and a much slower pace of hiring. We will continue to invest in top technical and engineering talent. \n Finally, we continue to execute the other work streams to slow expense growth, including improving efficiency in our technical infrastructure, streamlining operations across Alphabet through the use of AI, increasing efficiency of our spend with suppliers and vendors through our central procurement organization and optimizing our real estate portfolio. \n With respect to CapEx, our reported CapEx in the fourth quarter was $11 billion, driven overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers. The step-up in CapEx in Q4 reflects our outlook for the extraordinary applications of AI to deliver for users, advertisers, developers, cloud enterprise customers and governments globally and the long-term growth opportunities that offers. In 2024, we expect investment in CapEx will be notably larger than in 2023. \n With regard to Other Bets, we've been working to sharpen our investment focus while capturing the upside given compelling technology breakthroughs across the portfolio. For example, last week, Alphabet's X announced that it would be moving to spin out more projects as independent companies through external capital, giving X the opportunity to bring more focus to the breakthrough technologies it is working on to address some of the world's most pressing challenges. \n Thank you. Sundar, Philipp and I will now take your questions. \nOperator: [Operator Instructions] And our first question comes from Brian Nowak with Morgan Stanley. \nBrian Nowak: I have two for Philipp. Philipp, the first one is about sort of a lot of the new generative AI advertising tools. You obviously have a lot of irons in the fire here. You've been talking about some of the early momentum with tens of thousands of advertisers.\n The question is, can you sort of walk us through some of the hurdles and gating factors that we should be thinking through that dictate the pace at which these tools can really be rolled out broadly just so we and advertisers can kind of get an understanding for when they could have a bigger impact on the whole business? And then secondly, how do you think about the long-term sales force intensity of the advertising business as you roll more AI-based tools like PMax impacting the overall ad allocation? \nPhilipp Schindler: Yes. Thank you so much. So I've covered this a little bit on previous quarters. AI has been at the core of our advertising products for a very, very long time. And the recent advances are really allowing us to drive more value for advertisers across a large range of different areas: bidding, targeting, creative as well as our core advertiser and publisher experiences.\n We are seeing in core search ads, for example, the bidding side, the value-based bidding as a very significant one; on the targeting side, the broad match; on creative, responsive search ads automatically created ads assets. And we are very happy with the progress we're seeing in those areas.\n I think I mentioned in one of the previous calls that one, you asked about hurdles and gating factors. The AI essentials play neutral in this, trying to get everybody ready to really take full advantage of those tools. We talked about the progress on PMax as well that we're very happy with in Q4. So overall, I think we are on track with what we're expecting here.\n On the sales force intensity side, we have done a few reallocations or let me call it portfolio adjustments. As you know, we have 2 large different teams. One is our LCS, large customer solutions team that's really focused on transformational growth for our largest and most sophisticated customers. And we have our -- we call them GCS, Global Customer Solutions team, which is the channel where really every customer starts from some of our largest customers now to also the millions of smaller ones and SMBs.\n The GCS is really then scaling growth by dynamically delivering really the right treatment for every customer. And important to note, it's also our fastest-growing channel, and it delivered particularly strong growth in Q4. So we have done adjustments here to focus more resources on the GCS side.\n But I also want to be clear, when we restructure, there's always an opportunity to be more efficient and smarter in how we service and grow our customers. We're not restructuring because AI is taking away roles that's important here. But we see significant opportunities here with our AI-powered solution to actually deliver incredible ROI at scale, and that's why we're doing some of those adjustments. So I look at sales force intensity as a stronger focus going forward on the channels I mentioned here. \nOperator: Our next question comes from Doug Anmuth with JPMorgan. \nDouglas Anmuth: One for Ruth and one for Philipp. Ruth, you're now into year 2 of durably reengineering your cost structure. Can you just help us assess your progress so far? And are there any guideposts that we should be thinking about going forward?\n And then Philipp, can you talk more about NFL Sunday Ticket and just what your key learnings were in year 1? How are you thinking about the returns on the investment on both from an advertising perspective and then also subscribers to both Sunday Ticket and YouTube TV? \nRuth Porat: Thanks for the question. So we are very pleased with the progress we're continuing to make, and we are very committed to the framework to durably reengineer our cost base really as we're investing to support the growth priorities. I tried to call out a number of them in opening comments, but really, as you're looking at the work being done across Google, across Alphabet, it does start with product and process prioritization to make sure we've got the right resources behind the most important opportunities, and then that creates the opportunity for reallocating resources where we can.\n Then we talked a lot about this quarter about organizational efficiency and structure, and we're focused on removing layers to simplify execution and drive velocity. The combination of those 2, product prioritization and organizational design work, has resulted in the slower pace of hiring. You can see that in our head count numbers down year-on-year. You can see it in some of the -- in the results that we delivered in the fourth quarter.\n You can -- and it also goes to the announcements around first quarter and much lower pace of hiring. At this point in the quarter, we do estimate that severance-related expense will be roughly $700 million in the first quarter as we've continued these efforts. But as I said in opening comments, we will continue to invest in top engineering.\n So that's sort of the big one, if you start with product prioritization and organizational design, which is why also I made the note about the severance-related expense, which helps pave the way as we're continuing to do the work that we're doing. But then we have a host of other work streams, which I talked about, everything with improving efficiency in our technical infrastructure, which is a very large ongoing effort; streamlining operations across Alphabet through use of AI; all the work we're doing with our suppliers and vendors; the work we're doing optimizing our real estate portfolio. So when we've described durably reengineering, it's about continuing to build on work that started, and that is ongoing. \nPhilipp Schindler: So on the NFL Sunday Ticket side, look, as I said earlier, NFL Sunday Ticket supports our long-term strategy and really help solidify YouTube's position as a must-have app on everyone's TV set.\n You asked about some of the learnings. Maybe I'll start with the viewing experience. We've received great feedback so far. People like the navigation, multiview, the chat, the lack of latency, really, really positive feedback on this one. You asked about the ads and the subs. Maybe I'll start with the subscribers.\n We're pleased with the NFL Sunday Ticket sign-ups in our first season both as part of the YouTube TV bundle and as a stand-alone offering on YouTube Primetime Channels. Remember, you can access them via both. Nothing more to share on the sub side today on this one.\n On the ad side, as you know, advertisers can buy from an NFL lineup as part of our YouTube Select portfolio. And this actually allows advertisers to reach football fans across YouTube's pretty unique breadth of NFL content, independently of whether you're viewing live NFL games or on YouTube TV or Primetime Channels or watching NFL highlights, post-game commentary on YouTube channels.\n And we saw solid demand across the ad market around our YouTube Sunday Ticket offering here. We're excited about the partnership ahead or the partnerships ahead. This is our first season. And I mentioned over 90 upfront and scatter advertisers partnered with YouTube in our first year across NFL Sunday Ticket in-game opportunities, which we really appreciate. \nOperator: Our next question comes from Eric Sheridan with Goldman Sachs. \nEric Sheridan: Two, if I could. Sundar, a bigger-picture question, coming back to your comments earlier in the call on Search Generative Experience. When you think about the evolution of product over the next couple of years, how do you envision more traditional search and things like the Google Assistant continuing to evolve in a world of Search Generative Experience and Bard? And what that might mean for elements of commercial and noncommercial search and how use cases might change in the years ahead?\n And then Ruth, I just want to make sure we understood some of the messaging from the release and the public comments around one-timers in the quarter itself. It seems as if they were not allocated to the segments but are more elements of Other Bets and Alphabet-level activities. I just want to confirm whether elements of those one-timers were captured in the P&L statement and whether there were also any elements of legal one-timers that would be called out this quarter as well. \nSundar Pichai: Thanks, Eric. Great question. Look, it is an exciting time. Clearly, as I said, as we are incorporating SGE in the product, the early feedback is positive. And we've been iterating on it, and it clearly works for certain type of queries very well. We are expanding the set of queries where it works very well. It definitely is answering a certain category of queries for the first time in a better way. So that gives us direction to proceed as well.\n Overall, one of the things I think people underestimate about Search is the breadth of Search, the amount of queries we see constantly on a new day, which we haven't seen before. And so the trick here is to deliver that high-quality experience across the breadth of what we see in Search.\n And over time, we think Assistant will be very complementary. And we will again use generative AI there, particularly with our most advanced models in Bard and allows us to act more like an agent over time, if I were to think about the future and maybe go beyond answers and follow through for users even more. So that is the -- directionally, what the opportunity set is. Obviously, a lot of execution ahead. But it's an area where I think we have a deep sense of what to do. And all the work we have taken so far, the feedback has been super positive. \nRuth Porat: And then in terms of your other question, so on the real estate charge of $1.2 billion in exit charges related to real estate, that is in Alphabet-level activities. But the other comment I was making in opening comments is when you go through the various line items, R&D, et cetera, you see it spread there. And we have a table and IR can walk anybody through the technicals on that just to understand how it then gets arrayed across the various lines in the P&L. \nOperator: Our next question comes from Michael Nathanson with MoffettNathanson. \nMichael Nathanson: I have two for Philipp, I think. Given the importance of connected TV engagement in YouTube, can you talk about the opportunity outside the U.S. for connected TV? And what the company is doing at large to drive more adoption of YouTube or connected TVs given the Google operating system? And can you talk about outside the U.S.?\n And then you've been consistent about the strength of Shorts over the past year. Can you talk a bit about the modernization challenges? Do you still see the headwinds that you saw at the beginning? Anything you could share about the density of the auction or advertising interest on Shorts. So help us with whether or not that's still a headwind to growth. \nPhilipp Schindler: Yes. Thank you so much for your question. On the connected TV side, I mentioned it actually continues to perform really well. I said before, YouTube is the leader in U.S. streaming watch time and it's not just one audience group diving deep it's really all audiences. On the international side, it's something we are closely looking at. There's nothing specific I have to add at this moment in time on this one.\n On the Shorts monetization side, look, we built Shorts to respond to the huge demand from both creators and viewers for short-form video. And we're very pleased with the growth we've seen. I mentioned 2 billion-plus logged-in users every month, 70 billion in daily views. Specifically to the monetization question, Shorts monetization continues to progress nicely. In fact, actually, since we introduced revenue sharing for Shorts, the total creator earnings generated from Shorts have increased every month, and we expect this to continue. And similar, obviously, to our long-form videos, we're really committed here to a long-term partnership. And you heard me say this before, right, when creators succeed, we succeed. \nOperator: Our next question comes from Stephen Ju with UBS. \nStephen Ju: So Philipp, this is not a new question, but it's also been about 2 years since PMax was launched. But it seems like there's been this long lineage of product development and rollout of things like smart bidding in your history, which I believe at the time was designed to help smaller advertisers more easily run search advertising.\n And today, you're helping me to generate creative as well as manage my spend and maximize ROI across multiple Google Services. So how are you feeling about enabling SMBs who otherwise could not advertise with you before? And what kind of TAM expansion tailwind does that create for your revenue growth over the longer term? \nPhilipp Schindler: Look, as you know, SMBs are a huge focus for us. We mentioned this several times before. They're part of our GCS channel, not only there's more in this. But they've been under a ton of change over the last few years. And our focus has always been here on investing in solutions that really help level the playing field, and you mentioned several of those. So actually, SMBs can compete with bigger brands and more sophisticated advertisers.\n And so the feedback we're always getting is they need easy solutions that could drive value quickly, and several of the AI-powered solutions that you're mentioning are actually making the workflow and the whole on-ramp and the bidded targeting creative and so on, you mentioned that is so much easier for SMBs. So we're very satisfied with what we're seeing here. We will continue to invest. And I feel AI is really a helpful, very interesting future path to make life not only easier but also much more productive and better ROIs over time, more level playing field for SMBs. \nOperator: Our next question comes from Justin Post with BAML. \nJustin Post: Maybe one for Sundar and one for Ruth. Just on Search growth, I think there are some concerns on use of competitive AI tools as an alternative to Search. Just wondering if you're seeing any changes in query volumes, positive or negative, since you've seen the year evolve and more Search Generative Experiences. And what can really make Google stand out versus other AI tools?\n And then Ruth, CapEx was $11 billion, a step-up, obviously. Any onetime items in there? Or is that how we should think about the new run rate into '24. \nSundar Pichai: Thanks, Justin. First of all, look, we think about effects on Search, obviously, more broadly. People have a lot of information choices. So -- and user expectations are constantly evolving. And so we've been doing this for a long time. And I think what ends up mattering is a strong continuous track record of innovation.\n Obviously, generative AI is a new tool in the arsenal. But there's a lot more that goes into Search: the breadth, the depth, the diversity across verticals, stability to follow through, getting actually access to rich, diverse sources of content on the web and putting it all together in a compelling way.\n And I think, through the year 2, when we test, we test Search Generative Experience, particularly against everything that's out there. And we can see the progress we are making and how much users are liking the experience better. And so I think I feel very good about the progress. And our road map for '24 is strong both on the Search and the underlying AI progress, including the model. So I'm pretty excited about what's ahead of us in '24. \nRuth Porat: And with respect to CapEx, the CapEx of $11 billion in the fourth quarter, as I indicated, was overwhelmingly investment in our technical infrastructure. To your question, there was no onetime item in there. It really reflects is our outlook for everything Sundar and Philipp and I have been talking about, the extraordinary applications of AI within Google DeepMind, Google Services, Google Cloud, it's across the board for users, for advertisers, developers, cloud enterprise customers, governments. And it's really the long-term opportunity that offers.\n So last quarter, we did note that CapEx would continue to grow in 2024. We do expect 2024 full year CapEx to be notably larger than 2023. As a note, I think you all know this, but timing of cash payments can affect the quarterly CapEx number. But the main point is we're continuing to invest. \nOperator: Our next question comes from Ross Sandler with Barclays. \nRoss Sandler: So I guess a question for, I don't know if it's Sundar or Philipp. But if we go back to the DOJ trial that happened in the fall, there was a document that was disclosed from Google that said something along the lines of why being on ad quality team to deliver 20% RPM growth in Search is a fragile strategy. So dating back to 2019, your business has, I think, more than doubled since then.\n So I guess, as we sit here today in early 2024, how do you feel about Google's ability to drive Search RPM going forward? And I guess in the context of what Ruth said tonight about the large revenue base, just how do you feel about the monetization? \nSundar Pichai: Look, I think I have tremendous confidence in the quality driven both our work, be it search quality, ads quality, our improvements on search, our improvements on ads RPM, all -- 2 foundational pillars are extraordinary focus on ads quality so that we deliver the actual ROI to advertisers and improve the experience for users and all underpinned by rigor and technical excellence and go-to-market excellence, right?\n So the fundamental attributes don't change. I think AI gives us opportunity both on the organic side as well as on the monetization side. And I think we are in the early days of it. I think we'll be able to, taking a long-term view, serve information needs in a deeper way. And so I think about it in that -- with that long-term context, and I'm pretty excited about what's ahead. \nOperator: And our last question will be from Mark Mahaney with Evercore. \nMark Stephen Mahaney: One question on YouTube AI and one on cloud. On cloud first, there's just this volatility, this material deceleration last quarter and the nice reacceleration this quarter. Is that explained by where we are in the optimization cycle, and it may be generative AI workloads starting to trickle in now and cause that growth curve to bend back up? Any commentary just on the sort of the volatility, the deceleration and the reacceleration that we've seen?\n And then Philipp, I wanted to ask on the creative side, and particularly on YouTube and ads and the creative, using AI to improve the creative and really to offer SMBs who have been with Google forever but offer them now performance-based video ad campaigns created by AI. Is that kind of a new growth area? How far along are you in terms of offering this out into the market? And do you think that this opens up a new area of spend that wasn't there before? \nSundar Pichai: Thanks, Mark. On cloud, let me take that. First of all, a combination of factors. I think definitely excitement around the AI solutions on top of our foundational pillar, be it data and analytics, infrastructure, security, et cetera. But AI is definitely something which is driving interest and early adoption. And as you saw that greater than 70% of GenAI unicorns are using Google Cloud. And so I think it's an area where our strengths will continue to play out as we go through '24, especially when I look at innovation ahead from us on the AI front. And second, I think there are regional variations, but the cost optimizations in many parts are something we have mostly worked through. And I think that was a contributing factor as well. \nPhilipp Schindler: So on your YouTube question, maybe let me start with a general view. YouTube's mission, you know, has enabled millions of creators around the world to share their voice and connect with audiences and obviously build thriving businesses here. And AI has been a very critical piece of this already.\n You are obviously aware of the made YouTube announcement where we introduced a whole lot of new complementary creativity features on YouTube, including Dream Screen, for example, and a lot of other really interesting tools and thoughts. You can obviously imagine that we can take this more actively to the advertising world already. As you know, it continues already to power AI, a lot of our video ad solutions and measurement capabilities. It's part of video-rich campaigns. Multi-format ads are -- actually, there is a generative creator music that actually makes it easier for creators to design the perfect soundtrack already.\n And as I said earlier, AI will unlock a new world of creativity. And you can see how this will -- if you just look at where models are heading, where multimodal models are heading, where the generation capabilities of those models are heading, you can absolutely see how this will impact and positively impact and simplify the flow for creators, similar to what you see already emerging in some of our core products like ACA on the Search side. \nOperator: And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks. \nJames Friedland: Thanks, everyone, for joining us today. We look forward to speaking with you again on our first quarter 2024 call. Thank you and have a good evening. \nOperator: Thank you, everyone. This concludes today's conference call. Thank you for participating. You may now disconnect.",
'published': '2024-01-30',
'title': 'GOOG 2023Q4',
'author': 'GOOG'},
{'ticker': 'GOOG',
'quarter': '2024Q4',
'pub_quarter': '2025Q1',
'year': 2024,
'full_content': "Operator: Welcome, everyone. Thank you for standing by for the Alphabet Fourth Quarter and Fiscal Year 2024 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] I would now like to hand the conference over to your speaker today, Jim Friedland, Senior Director of Investor Relations. Please go ahead.\nJim Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's fourth quarter 2024 earnings conference call. With us today are Sundar Pichai; Philipp Schindler; and Anat Ashkenazi. Now I'll quickly cover the Safe Harbor. Some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. And now I'll turn the call over to Sundar.\nSundar Pichai: Thanks, Jim, and hello, everyone. We delivered another strong quarter in Q4, driven by our leadership in AI and our unique full stack. We're making dramatic progress across compute, model capabilities, and in driving efficiencies. We're rapidly shipping product improvements, and seeing terrific momentum with consumer and developer usage. And we're pushing the next frontiers, from AI agents, reasoning and deep research, to state-of-the-art video, quantum computing and more. The company is in a great rhythm and cadence, building, testing, and launching products faster than ever before. This is translating into product usage, revenue growth, and results. In Search, AI overviews are now available in more than 100 countries. They continue to drive higher satisfaction in Search usage. Meanwhile, circle to search is now available on over 200 million android devices. In Cloud and YouTube, we said at the beginning of 2024 that we expected to exit the year at a combined annual revenue run rate of over $100 billion. We met that goal and ended the year at a run rate of $110 billion. We are set up well for continued growth. So today I'll provide an update on our AI progress and how it's improving our core consumer products. Then I'll touch on Cloud, YouTube, Platforms and Devices, and Waymo. Let's start with AI. Last quarter, I outlined the three areas of our differentiated full stack approach to AI innovation. Our leading AI infrastructure, our world-class research, including models and tooling, and our products and platforms that bring these innovations to people at scale. First, AI Infrastructure. Our sophisticated global network of cloud regions and data centers provides a powerful foundation for us and our customers, directly driving revenue. We have a unique advantage, because we develop every component of our technology stack, including hardware, compilers, models, and products. This approach allows us to drive efficiencies at every level, from training and serving, to developer productivity. In 2024, we broke ground on 11 new cloud regions and data center campuses in places like South Carolina, Indiana, Missouri, and around the world. We also announced plans for seven new subsea cable projects, strengthening global connectivity. Our leading infrastructure is also among the world's most efficient. Google data centers deliver nearly 4x more computing power per unit of electricity compared to just 5 years ago. These efficiencies, coupled with the scalability, cost and performance we offer, are why organizations increasingly choose Google cloud's platform. In fact, today, cloud customers consume more than 8x the compute capacity for training and inferencing compared to 18 months ago. We'll continue to invest in our cloud business to ensure we can address the increase in customer demand. Second, world class research including models. In December, we unveiled Gemini 2.0, our most capable AI model yet, built for the agentic era. We launched an experimental version of Gemini 2.0 flash, our workhorse model with low latency and enhanced performance. Flash has already rolled out to the Gemini app, and tomorrow we are making 2.0 flash generally available for developers and customers, along with other model updates. So stay tuned. Late last year, we also debuted our experimental Gemini 2.0 Flash Thinking Model. The progress-to-scale thinking has been super fast, and the reviews so far have been extremely positive. We are working on even better thinking models and look forward to sharing those with the developer community soon. Gemini 2.0 advances in multi modality and made of tool use enable us to build new agents that bring us closer to our vision of a universal assistant. One early example is Deep Research. It uses agentic capabilities to explore complex topics on your behalf, and give key findings, along with sources. It launched in Gemini Advanced in December, and is rolling out to android users all over the world. We are seeing great product momentum with our consumer Gemini app, which debuted on IOS last November. And we have opened up trusted tester access to a handful of research prototypes, including Project Mariner, which can understand and reason across information on a browser screen to complete tasks and Project Astra. We expect to bring features from both to the Gemini app later this year. We're also excited by the progress of our video and image generation models. Veo 2, our state-of-the-art video generation model, and Imagen 3, our highest quality text-to-image model. These generative media models, as well as Gemini, consistently top industry leader boards and score top marks across industry benchmarks. That's why more than 4.4 million developers are using our Gemini models today, double the number from just 6 months ago. And we continue to drive research breakthroughs in quantum computing. At the end of last year, we announced Willow, our new state-of-the-art quantum computing chip that can reduce errors exponentially as we scale up using more qubits. Willow is an important step in our journey to build a useful quantum computer with practical applications. This technology holds so much promise, which is why there was real excitement around this breakthrough. Third, our Products and Platforms put AI into the hands of billions of people around the world. We have seven Products and Platforms with over 2 billion users and all are using Gemini. That includes Search, where Gemini is powering our AI overviews. People use Search more with AI overviews and usage growth increases over time as people learn that they can ask new types of questions. This behavior is even more pronounced with younger users who really appreciate the speed and efficiency of this new format. We also are pleased to see how Circle to Search is driving additional Search use and opening up even more types of questions. This feature is also popular among younger users. Those who have tried Circle to Search before now use it to start more than 10% of their searches. As AI continues to expand the universe of queries that people can ask, 2025 is going to be one of the biggest years for Search innovation yet. Now, let me turn to key highlights from the quarter across Cloud, YouTube, Platforms and Devices, and Waymo. First, Google Cloud. Our AI-powered cloud offerings enabled us to win customers such as Mercedes-Benz, Mercado Libre and Servier. In 2024, the number of first-time commitments more than doubled, compared to 2023. We also deepened customer relationships. Last year, we closed several strategic deals over $1 billion, and the number of deals over $250 million doubled from the prior year. Our partners are further accelerating our growth, with customers purchasing billions of dollars of solutions through our Cloud marketplace. We continue to see strong growth across our broad portfolio of AI-powered Cloud solutions. It begins with our AI Hypercomputer, which delivers leading performance and cost, across both GPUs and TPUs. These advantages help Citadel with modeling markets and training, and enabled Wayfair to modernize its platform, improving performance and scalability by nearly 25%. In Q4, we saw strong uptake of Trillium, our sixth-generation TPU, which delivers 4x better training performance and 3x greater inference throughput compared to the previous generation. We also continue our strong relationship with NVIDIA. We recently delivered their H200-based platforms to customers and just last week, we were the first to announce a customer running on the highly-anticipated Blackwell platform. Our AI developer platform, Vertex AI, saw a 5x increase in customers year-over-year, with brands like Mondelez International and WPP building new applications and benefitting from our 200+ foundation models. Vertex usage increased 20x during 2024, with particularly strong developer adoption of Gemini Flash, Gemini 2.0, Imagen 3, and most recently, Veo. We are also seeing strong growth in our AI-powered databases, data analytics, and cybersecurity platforms. Customers including Radisson Hotels are now using Gemini to Search and analyze multi-modal data from across multiple Clouds. Our AI-powered Threat Intelligence and Security Operations products help customers, including Vodafone and AstraZeneca, identify, protect and defend against threats. Our growing portfolio of AI applications is also seeing strong customer adoption. In Q4, we introduced Google Agentspace, which helps enterprises synthesize data with Google-quality Search, create Gemini-powered agents, and automate transactions for employees. In addition, we recently gave all Google Workspace Business and Enterprise customers access to all of our powerful Gemini AI capabilities to help boost their productivity. Moving to YouTube. Nielsen data shows YouTube continues to be number one in streaming watchtime in the U.S., with our share of streaming now at a record high. On election day alone, over 45 million viewers across the U.S. watched election-related content on YouTube. Our early investment in podcasts is paying off. We integrated podcasts into the core YouTube experience, particularly with video. We are now the most frequently used service for consuming podcasts in the U.S., according to a recent Edison report. This success reflects our long-term approach of investing in emerging trends, from mobile to the living room. We now have over 250,000 creators in the YouTube Shopping affiliate program in the U.S. and Korea alone. We expanded YouTube Shopping at the end of last year to three additional countries, allowing even more creators to share their favorite products with fans and grow their businesses. Philipp will talk more about YouTube performance later in the call. Next, Platforms and Devices. Google One's performance has been outstanding, and is one of our fastest growing subscription products in terms of subscribers and revenue growth. Last month, we announced the first beta of Android 16, plus new Android updates, including a deeper Gemini integration coming to the new Samsung Galaxy S25 series. We also recently announced Android XR, the first Android platform built for the Gemini era. Created with Samsung and Qualcomm, Android XR is designed to power an ecosystem of next-generation extended reality devices, like headsets and glasses. Finally, a few words on Waymo which made tremendous progress last year, safely serving more than 4 million passenger trips. It is now averaging over 150,000 trips each week, and growing. Looking ahead, Waymo will be expanding its network and operations partnerships to open up new markets, including Austin and Atlanta this year and Miami next year. And in the coming weeks, Waymo One vehicles will arrive in Tokyo for their first international road trip. We're also developing the sixth-generation Waymo Driver, which will significantly lower hardware costs. I want to thank our employees around the world for another great quarter. 2025 is going to be exciting and we’re all ready for it. Philipp, I will hand it over to you.\nPhilipp Schindler: Thanks, Sundar, and hello, everyone. I will quickly cover performance for the quarter, then frame the rest of my remarks around the progress we are delivering across Search, Ads, YouTube and Partnerships, highlighting the impact AI is having on our business and our customers. Google Services revenues were $84 billion for the quarter, up 10%, driven primarily by 11% year-on-year growth in advertising revenues. Strong growth in Search and YouTube advertising was partially offset by year-over-year decline in network revenues. In terms of vertical performance, the 13% increase in Search and other revenues was led by financial services followed by retail. The 14% growth in YouTube advertising revenues was driven by strong spend on U.S. election advertising, with combined spend from both parties almost doubling from what we saw in the 2020 elections. Now, in Q4, we saw continued strong growth in revenues from Search. We had lots of exciting updates in December, and we're rapidly integrating our AI innovation into our consumer experiences. We've already started testing Gemini 2.0 in AI overviews and plan to roll it out more broadly later in the year. In Search, we're seeing people increasingly ask entirely new questions using their voice, camera, or in ways that were not possible before, like with Circle to Search. We're making these benefits available to more consumers. Google is already present in over half of journeys where a new brand, product, or retailer are discovered. By offering new ways for people to Search, we're expanding commercial opportunities for our advertisers. Shoppers can now take a photo of a product and, using lens, quickly find information about the product, reviews, similar products, and where they can get it for a great price. Lens is used for over 20 billion visual search queries every month, and the majority of these searches are incremental. Retail was particularly strong this holiday season, especially on Black Friday and Cyber Monday, which each generated over $1 billion in ad revenue. Interestingly, despite the U.S. holiday shopping season being the shortest since 2019, retail sales began much earlier, in October, causing the season to extend longer than anticipated. People shop more than a billion times a day across Google. Last quarter, we introduced a reinvented Google shopping experience, rebuilt from the ground up with AI. This December saw roughly 13% more daily active users on Google shopping in the U.S. compared to the same period in 2023. Closing out on Search with travel, and sharing another interesting trend where we saw spend expand to travel Tuesday. This contributed to 20% year-on-year revenue growth for travel advertisers across Cyber Monday and Travel Tuesday. Moving to Ads. We continue investing in AI capabilities across media buying, creative and measurement. As I said before, we believe that AI will revolutionize every part of the marketing value chain, and over the past quarter, we've seen how our customers are increasingly focusing on optimizing their use of AI. As an example, Petco used DemandGen campaigns across targeting, creative generation, and bidding to find new pet parent audiences across YouTube. They achieved a 275% higher return on ad spend and a 74% higher click through rate than their social benchmarks. On media buying, we made YouTube select creator takeovers generally available in the U.S. and will be expanding to more markets this year. Creators know their audience the best and creator takeovers help businesses connect with consumers through authentic and relevant content. Looking at Creative, we introduced new controls and made reporting easier in PMAX, helping customers better understand and reinvest into their best performing assets. Using asset generation in PMAX. Event Ticket Center achieved a 5x increase in production of creative assets, saving time and effort. They also increased convergence by 300% compared to the previous period when they used manual assets. And finally, Measurement. Last week, we made Meridian, our marketing mix model, generally available for customers, helping more business reinvest into creative and media buying strategies that they know work. Based on a Nielsen meta-analysis of marketing mix models, on average, Google AI-powered video campaigns on YouTube deliver 17% higher return on advertising spend than manual campaigns. Turning to YouTube. We saw robust revenue growth backed by continued growth and watch time across ad supported and premium experiences. Our focus here remains on building a streaming platform that enables creators to thrive and unlock the full potential of AI. Expanding on our state-of-the-art video generation model, we announced Veo 2, which creates incredibly high quality video in a wide range of subjects and styles. It's been inspiring to see how people are experimenting with it. We'll make it available to creators on YouTube in the coming months. We continue to invest in helping YouTube creators work with brands. All advertisers globally can now promote YouTube creator videos and ad campaigns across all AI-powered campaign types in Google Ads. And creators can tag partners in their brand videos. Sephora used DemandGen's Shorts-Only channel to boost traffic and brand searches for the Holiday Gift Guide campaign and leverage creator collaborations to find the best gift. This drove an 82% relative uplift in searches for Sephora Holiday. Shorts continues its ascent and is closing the gap with long form. In 2024, the monetization rate of Shorts relative to in-stream viewing increased by more than 30 percentage points in the U.S., and we expect to make additional progress in 2025. We're making it easier for advertisers to benefit from Shorts on all screens. We're particularly excited by its success on connected TV, which now makes up 15% of shorts viewing in the U.S. Using a combination of ad formats, Louis Vuitton reached their overall objectives on both long-form and short-form content. Their shorts exceeded luxury goods benchmark for average view duration by 89% for equivalent video lengths, while their long-form content exceeded the benchmark by over 15%, with strong engagement from Gen Z and Millennials. Looking into the living room, we continue to be number one in streaming watch time in the U.S for nearly two years, according to Nielsen, and our share of streaming is at a record high. Viewers globally streamed over 1 billion hours of YouTube content daily on their TVs in 2024. YouTube makes multi-year investments to tap into shifting consumer behavior. The current surge in living room viewership directly reflects years of work to build the right products and partnerships. Creators are now prioritizing high-quality viewing experiences that truly shine on TV screens, inspiring even more viewers to tune in. In fact, the number of creators making majority of revenue from TV is up over 30% year-on-year. We have also invested in podcasts, where popular shows like Club Shay Shay and Lex Friedman are increasingly a visual format. YouTube creators and viewers are embracing this. In 2024, people watched over 400 million hours of podcasts each month on living room devices alone. YouTube is now the most popular service for podcast listening in the U.S., according to Edison. As always, let me wrap with the strong momentum we're seeing in partnerships, where the breadth of what Google has to offer is increasingly being recognized. Sundar mentioned our deepening partnership with Samsung. Another expanding partnership is with Citi, who is modernizing its technology infrastructure with Google Cloud to transform employee and customer experiences. Using Google Cloud, it will improve its digital products, streamline employee workflows, and use advanced high-performance computing to enable millions of daily computations. This partnership also fuels Citi's generative AI initiatives across customer service, document summarization, and search to reduce manual processing. With that, allow me a moment to thank Googlers everywhere for their extraordinary commitment and to our customers and partners for their continued trust. Anat, over to you.\nAnat Ashkenazi: Thank you, Philipp. We're pleased with the continued momentum we're seeing across the business as Alphabet revenue for 2024 reached $350 billion, up 14% on a reported basis and 15% in constant currency versus 2023. My comments will focus on year-over-year comparisons for the fourth quarter, unless I state otherwise. I will start with the results at the Alphabet level and we'll then cover our segment results. I'll end with some commentary and expectations over the first quarter and full year 2025. We had another strong quarter in Q4 with robust momentum across the business. Consolidated revenue of $96.5 billion, increased by 12% in both reported and constant currency. Search remained the largest contributor to revenue growth, followed by Cloud. Total cost of revenue was $40.6 billion, up 8%. Tech was $14.8 billion, up 6%. We continue to see a revenue mix shift with Google Search growing at double-digit levels, while network revenues, which have a much higher tech rate, declined. Other cost of revenue was $25.8 billion, up 9%, with the increase primarily driven by content acquisitions costs, primarily for YouTube, followed by depreciation, due to increasing investments in our technical infrastructure. Growth in content acquisition and depreciation were partially offset by our year-over-year decline in hardware costs due to the shift in timing of our made-by-Google launches to the third quarter 2024 compared to the fourth quarter of 2023. In terms of total expenses, the year-over-year comparisons reflect $1.2 billion in exit charges that we took in the fourth quarter of 2023 in connection with actions to optimize our global office space. As previously disclosed, those charges were allocated across the expense lines in other costs of revenue and OpEx based on associated headcount. Total operating expenses decreased 1% to $24.9 billion. R&D investments increased by 8%, primarily driven by increase in compensation and depreciation expenses, partially offset by the impact of charges for office [ph] space optimization in the fourth quarter of 2023. Sales and marketing expenses decreased 5%, primarily reflecting the optimization charges last year, as well as declines in compensation and in ads and promotion expenses due to the timing shift of the Pixel launch from Q4 to Q3. G&A expenses declined by 15%, reflecting a shift of timing in our charitable contributions, as well as the optimization charges last year. Operating income increased 31%, the score [ph] to $31 billion, and operating margin increased to 32%, representing 4.6 points of margin expansion. Net income increased 28% to $26.5 billion, and earnings per share increased 31% to $2.15. We delivered free cash flow of $24.8 billion in the fourth quarter and $72.8 billion for the full year 2024. We ended the quarter with $96 billion in cash and marketable securities. Turning to segment results. Google Service revenues increased 10% to $84.1 billion, reflecting the strong momentum across Google Search and YouTube ads. Google Search and other advertising revenues increased by 13% to $54 billion. The robust performance of Search was once again broad-based across verticals, led by the financial service vertical due to strength in insurance, followed by retail. YouTube advertising revenue increased 14% to $10.5 billion, driven by brand, followed by direct response advertising. Network advertising revenue of $8 billion, were down 4%. In the fourth quarter, the year-over-year comparison in all of our advertising revenue lines was impacted by the increase in strength in advertising revenue in Q4 2023, in part from APAC-based retailers. Subscription platforms and device revenues increase 8% to $11.6 billion, primarily reflecting growth in subscription revenues, partially offset by the shift in timing of the launch of our made by Google devices to the third quarter, compared with the fourth quarter in 2023. We continue to have significant growth in our subscription products, primarily due to increase in the number of paid subscribers across YouTube TV, YouTube Music Premium, and Google One. With regards to Platform, we saw a slight increase in the growth rate in Play, primarily due to a strong increase in the number of buyers. Google's service operating income increased 23% to $32.8 billion, and operating margin increased from 35% to 39%, representing a meaningful margin expansion. Turning to the Google Cloud segment, which continued to deliver very strong results this quarter. Revenue increased by 30% to $12 billion in the fourth quarter, reflecting growth in GCP across core GCP products, AI infrastructure, and generative AI solutions. Once again, GCP grew at a rate that was much higher than cloud overall. Healthy Google Workspace growth was primarily driven by increase in average revenue per seat. Google Cloud operating income increased to $2.1 billion, and operating margin increased from 9.4% to 17.5%. We're pleased with the work the cloud team is doing to deliver valuable solutions to the customer and generate revenue growth, as well as its continued focus on driving efficiencies across the cloud business. As for Other Bets, for the fourth quarter, revenue were $400 million, and the operating loss was $1.2 billion. The year-over-year decline in revenue and increase in operating loss primarily reflect the milestone payment in the fourth quarter of 2023 for one of the Other Bets. Turning to Alphabet level activities, the largest component of this line is our investments in AI research and development activities which support all of Alphabet. As a reminder, Alphabet level activities have included nearly all severance charges from reductions in workforce and office space charges. In the fourth quarter of 2024, the biggest factor in year-over-year comparison is the $1.2 billion in charges in the fourth quarter of 2023, almost entirely in connection with office space optimization. With respect to CapEx, our reported CapEx in the fourth quarter was $14 billion, primarily reflecting investments in our technical infrastructure, with the largest component being investment in servers, followed by data centers, to support the growth of our business across Google Services, Google Cloud, and Google DeepMind. In Q4, we returned value to shareholders in the form of $15 billion in share purchases and $2.4 billion in dividend payments. Overall, we returned a total of nearly $70 billion to shareholders in 2024. Turning to 2025, I would like to provide some commentary on several factors that will impact our business performance in both the first quarter and the full year 2025. First in terms of revenue, I'll highlight two items that will have meaningful impact on Q1 revenue across the company. First in terms of revenues, I'll highlight two items that will have meaningful impact on Q1 revenues across the company. The first is the impact of foreign exchange rates. At the current spot rates, we expect a larger headwind to our revenues from the strengthening of the U.S dollar relative to key currencies in Q1 versus Q4 2024. Second is the impact of leap year. We expect a headwind from having one less day of revenue in Q1 2025 compared with leap year in the first quarter of 2024. As for our segments, Google Services, advertising revenue in 2025 will be impacted by lapping the strength we experience in the financial service vertical throughout 2024. And in Cloud, given the revenues are correlated with the timing of deployment of new capacity, we could see variability in cloud revenue growth rates depending on when new capacity comes online during 2025. Moving to investments, starting with our expectation for CapEx for the full year 2025. As we mentioned on the Q3 call, as we expand our AI efforts, we expect to increase our investments in capital expenditure for technical infrastructure, primarily for servers, followed by data centers and networking. We expect to invest approximately $75 billion in CapEx in 2025 with approximately $16 billion to $18 billion of debt in the first quarter. The expected total investment level may fluctuate from quarter-to-quarter, primarily due to timing of deliveries and construction schedules. In terms of expenses, first, the increase in our investment in CapEx over the past few years will increase pressure on the P&L, primarily in the form of higher depreciation. In 2024, we saw 28% year-over-year growth in depreciation as we put more technical infrastructure assets into service. Given the increase in CapEx investments over the past few years, we expect the growth rate and depreciation to accelerate in 2025. Second, we expect some headcount growth in 2025 in key investment areas such as AI and cloud. As you just heard from Sundar, we're delivering products and solutions to customer at a rapid pace, building, testing, and launching products faster than ever before. And as I mentioned on the Q3 call, we're doing that while also focusing on driving further efficiencies in how we operate the business. Before we take questions, I'd like to recap the financial results for the year. For the full year 2024, revenue grew by 14% or by $43 billion, reaching $350 billion. Google Services and Google Cloud each continue to see double-digit revenue growth coupled with margin extension. YouTube and cloud revenues combined, ended the year at $110 billion annual run rate. And in 2024, we generate total income of $112 billion, an increase of 33% from 2023. We're pleased with the momentum we're seeing in AI innovation and monetization. We've been using AI to improve the performance of our ads business for well over a decade, and Cloud is generating billions in annual revenue from AI infrastructure and generative AI solutions. We're also excited about the potential to bring new experiences to users that will provide additional opportunities for monetization. And I look forward to sharing more in our progress throughout the year. Sundar, Philipp, and I will now take your questions.\nOperator: [Operator Instructions] And our first question comes from Brian Nowak with Morgan Stanley. Your line is now open.\nBrian Nowak: Thanks for taking my questions. I have two, one for Sundar, one for Anat. Sundar, maybe kind of step back on Search, there's a -- it seems like there's a lot of advances to come with Gen AI and agentic possibilities with Search. Can you just sort of walk us through your big picture vision over the next few years of how you think about your Search product continue to evolve to stay at the top of the funnel and drive more engagement and monetization for your users and advertisers. And then the second one, Anat, I think about 90 days ago, you talked about sort of further efficiencies and areas of simplification on the OpEx space. Can you just sort of walk us through some examples of where you see the potential for further efficiencies to the OpEx space, excluding the DNA step-ups that we have to come in 2025. Thanks.\nSundar Pichai: Thanks, Brian. On Search, obviously, we view, I mean, this has been a long continual journey. AI overviews has been the next step. It's playing out positively, as we have indicated, the metrics look great, and we are obviously trading on that experience, bringing better and better models, expanding to the number of queries where it works and so on. But there's a lot more to come. I think we'll continue bringing AI in more powerful ways, in multi-modal ways. Things like what we've done with Lens Circle to Search, you can imagine the future with Project Astra. You can also imagine areas like we have done in Gemini Deep Research, possibilities where you are really dramatically expanding the types of use cases for which Search can work, things which don't always get answered instantaneously but can take some time to answer. Those are all areas of explorations and you will see us, putting newer experiences in front of users through the course of 2025. And so I do feel the opportunity space with AI, there's a lot of unlock ahead.\nAnat Ashkenazi: Thanks. And for the question with regards to where do we see or where do I see leverage moving forward and some of the comments I've made on the previous call. I certainly see opportunities for further productivity and efficiency, and this is one of our priority areas. And we're going to do that so that we can make sure we continue to invest in areas such as AI and cloud where we see potential for continued growth. I'll remain focused on areas that I've mentioned before, which include the technical infrastructure, so the $75 billion in CapEx I mentioned for this year, the majority of that is going to go towards our technical infrastructure, which includes servers and data centers. So ensuring we do that in the most efficient way is critical. Second is managing headcount growth, and we're going to be investing in areas of growth, such as AI and cloud, but looking across the organization and moderating that growth will be important. Optimizing the real estate footprint is one of the areas I've mentioned. We're continuing to focus on that. As well as looking at how we simplify the organization, we've previously mentioned bringing like areas together. Sundar talked about bringing some of the AI research teams together so that we can operate with increased speed, but also how we operate within the organization. Using our own AI tools to how we run the business, whether it's the code that Sundar mentioned on the previous call, writing code with AI, or even running some of our key processes using AI tools. So we're looking at all that. It's going to -- it's -- this is not a one-quarter type of effort. It's going to continue throughout the year, and we're going to continue to focus on that so that we can support the growth in other areas.\nOperator: Our next question comes from Doug Anmuth with JPMorgan. Your line is now open.\nDoug Anmuth: Thanks for taking the questions, one for Philipp and one for Anat. Philipp, can you just talk more about the expanded rollout of ads on AI overviews and perhaps what additional things you may have learned in 4Q? And I guess in particular, just curious if you rolled out to a higher percentage of commercial queries and is it still fair to say that you're monetizing nearly on par with existing search? And then Anat, just on the -- on cloud growth, a little bit of decel 3Q to 4Q, but it sounded like you also suggested that your capacity constrained in the fourth quarter. I just wanted to push on that a little bit more. How -- is that accurate and is it fair to say that revenue growth could have been higher with much more capacity? Thanks.\nPhilipp Schindler: So, on your first question, first of all, AI overviews, which is really nice to see, continue to drive higher satisfaction and search usage. So, that's really good. And as you know, we recently launched the ads within AI overviews on mobile in the U.S., which builds on our previous rollout of ads above and below. And as I talked about before, for the AI overviews overall, we actually see monetization at approximately the same rate, which I think really gives us a strong base on which we can innovate even more.\nAnat Ashkenazi: On the cloud questions, so first I'm excited that we ended the quarter at $12 billion and a 30% year-over-year growth, very impressive growth. And as I've mentioned, the prepared remark, GCP grew at a much higher rate than overall cloud. Two items to think about from a deceleration perspective. The first is we are lapping a very strong quarter of [indiscernible] deployment in Q4 of 2023. The second is the one you've alluded to. We do see and have been seeing very strong demand for AI products in the fourth quarter in 2024. We exited the year with more demand than we had available capacity. So we are in a tight supply demand situation, working very hard to bring more capacity online. As I mentioned, we've increased investment in CapEx in 2024, continue to increase in 2025, and will bring more capacity throughout the year.\nDoug Anmuth: Thank you both.\nOperator: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open.\nEric Sheridan: Thank you for taking the question. I'll just ask one. Sundar, with the news that came out of China a little over 2 weeks ago, I think investors have been asking a lot of questions about the long-term cost curve for AI as AI moves from the infrastructure layer to the application layer or from training to inference and maybe even custom silicon becomes more dominant across the theme. I would love to get your perspective on your take on that news a couple of weeks ago and what it might mean for Alphabet longer term. Thank you.\nSundar Pichai: Thanks, Eric. Look, I think there's been a lot of observations on DeepSeek. First of all, I think a tremendous team. I think they've done very, very good work. Look, I think for us it's always been obvious, over time, there's frontier model development, but you can drive a lot of efficiency to serve these models really, really well. And if you look at one of the areas in which the Gemini model shine is the Pareto frontier of cost, performance, and latency and if you look at all three attributes, I think we lead this Pareto frontier. And I would say both are 2.0 flash models or 2.0 flash thinking models. They are some of the most efficient models out there, including comparing to DeepSeek's V3 and R1. And I think a lot of it is our strength of the full stack development into an optimization, our obsession with cost per query, all of that, I think, sets us up well for the workloads ahead, both to serve billions of users across our products and on the cloud side. Couple of things I would say are, if you look at the trajectory over the past 3 years, the proportion of the spend towards inference compared to training has been increasing, which is good because obviously inference is to support businesses with good ROIC. And so I think that trend is good. I think the reasoning models, if anything, accelerates that trend because it's obviously scaling upon inference dimension as well. And so I think, look, I think part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, which will make more use cases feasible. And that's the opportunity space. It's as big as it comes. And that's why you're seeing us invest to meet that moment.\nEric Sheridan: Thank you.\nOperator: Your next question comes from Michael Nathanson with MoffettNathanson. Your line is now open.\nMichael Nathanson: Thank you. I have two, one for Philipp and one for Anat. Philipp, question for you is we're starting to see more AI tools on eCommerce sites and something like research with AI recommendations is on Google Shopping. Can you talk about how that product and other AI tools are impacting shopping behavior? I've had that impact in modernization. And then I guess the $75 billion question Anat is, how do you think about long-term capital intensity for this business? It sounds like there's a bit of constraint in terms of getting things built, but how do you think about the modeling of capital intensity going forward, and what are the things that you're looking forward to in terms of whether or not this is the right level of spend? Thank you.\nPhilipp Schindler: Look, excellent question. We've been using our advances in AI to make search for products on Google even easier, obviously. And in Q4, we actually introduced quite a transformed Google Shopping experience, which we rebuilt from the ground up with AI. And people shop more than a billion times a day across Google. Last quarter, we introduced this fully reinvented Google Shopping experience. In December, we saw roughly, I mentioned, as 13% more daily active users in Google Shopping in the U.S compared to the same period last year. So that's a good development here. And the new Google Shopping experiences, specifically to your question, uses AI to really intelligently show the most relevant products, helping to speed up and simplify your research. You get an AI-generated brief with top things to consider for your search, plus maybe products that meet your needs. So shoppers very often want low prices. So the new page not only includes like deal finding tools like price comparison, price insights, price tracking throughout, but there's also a new and dedicated personalized deals page where you can browse deals for you, and all this is really built on the backbone of AI. So we think this is a very interesting opportunity.\nAnat Ashkenazi: And on the question of capital expenditure, and I think you may have two questions in there, one is just the capital intensity and then how would we think about return on that invested capital. So on the first one, certainly we are looking ahead, but we are managing very responsibly with a very rigorous even internal governance process looking at how do we allocate the capacity and what would we need to support the customer demand externally, but also across the Google, the Alphabet business. And as you've seen in the comment I've just made on cloud, we do have demand that exceeds our available capacity, so we'll be working hard to address that and make sure we bring more capacity online. We do have the benefit of having a very broad business, and we can repurpose capacity, whether it's through Google Services or Google Cloud to support, as I said, whether it's Search or GDM or Google Cloud Customers, we can do that in a more efficient manner. We also look at every investment that we make to ensure that we're doing it in the most cost-efficient way to optimize our data center. As you know, our strategy is mostly to rely on our own self-design and build data centers. So they're industry-leading in terms of both cost and power efficiency at scale. We have our own customized TPUs. They're customized for our own workload. So, they do deliver outstanding superior performance and CapEx efficiency. So, we're going to be looking at all that when we make decisions as to how we're going to progress capital investments throughout the coming years.\nMichael Nathanson: Thank you.\nOperator: Your next question comes from Mark Shmulik with Bernstein. Your line is now open.\nMark Shmulik: Yes, thanks for taking the question. Sundar, I just wanted to follow-up to Brian's question from earlier. With your own Project Mariner efforts and a competitor's recent launch, it seems there's suddenly really strong momentum on AI consumer agents and kind of catching up to that old Google duplex vision. I think when you look a few years ahead, where do you see consumer agents going and really, what does it mean to Google Search outside of Lens? Is there room for both to flourish or will they eventually be in conflict with each other? Thank you.\nSundar Pichai: Look, I think first of all, we are definitely seeing a lot of progress in the underlying capabilities of these models. Gemini 2.0 was definitely built with the view of enabling more agentic use cases. And so, I actually, and we are definitely seeing progress inside, and I think we'll be able to do more agentic experiences for our users. Look, I actually think all of this expands the opportunity space. I think historically we've had information use cases, but now you can have, you can act on your information needs in a much deeper way. It's always been our vision when we have talked about Google Assistant, et cetera. So I think the opportunity space expands. I think there's plenty of, it feels very far from a zero-sum game. There's plenty of room, I think, for many new types of use cases to flourish. And I think for us, we have a clear sense of additional use cases we can start to tackle for our users in Google Search. And all the early work with AI overview shows that users will react positively to that. So, I'm pretty excited about what's ahead.\nOperator: Your next question comes from Ross Sandler with Barclays. Your line is now open.\nRoss Sandler: Great. One on infrastructure and then one on the guidance on revenue. So Sundar, if we look at the inference cost per 1 million tokens and not the API pricing we see for Gemini versus something like GPT-4, but the raw cost of generating inference tokens on your TPU stack. How much more efficient do you think you guys are in terms of generating 1 million tokens compared to inference costs running on your cloud peers? Do you see this as an advantage as everything shifts to inference? And then Anat, you call out lapping the financial services category strength in 2025 as a bit of a problem for Search. Could you just quantify a little bit of that? Is that kind of the same as when you guys talk about lapping the Asia outbound advertiser channel? Any numbers you could put around that headwind? Thank you very much.\nSundar Pichai: Ross, like, look, the whole TPU project started, V1 was effectively an inferencing chip, so we've always, part of the reason we have taken the end-to-end stack approach is that, so that we can definitely drive a strong differentiation in end-to-end optimizing, and not only on a cost, but on a latency basis and a performance basis. We have the Pareto frontier we mentioned, and I think our full-stack approach and our TPU efforts all play -- give a meaningful advantage, and we plan, you already see that. I know you asked about the cost, but it's effectively captured. When we price outside, we pass on the differentiation. It's partly why we've been able to bring forward flash models at very attractive value props, which is what is driving both developer growth. We've doubled our developers to 4.4 million in just about 6 months. Vertex usage is up 20x last year. And so all of that is a direct result of that approach and so we will continue doing that.\nAnat Ashkenazi: And on the question regarding my comment on lapping the strength in financial services, this is primarily related to the structural changes with regards to insurance, it is more specifically within financial services, it was the insurance segment and we saw that continue, but it was a one-time kind of a step up and then we saw it throughout the year. I am not going to give any specific numbers as to what we expect to see in 2025, but I am pleased with the fact that we are seeing and continue to see strength across really all verticals including retail and exiting the year in a position of strength. If anything, I would highlight as you think about the year, the comments I have made about the impact of FX, as well as the fact that we have one less day of revenue in Q1.\nOperator: Your next question comes from Justin Post with Bank of America. Your line is now open.\nJustin Post: Great. Thank you. A couple for Philipp. You mentioned higher search usage with overviews. Just wondering how you're feeling about overall Search usage. Is it accelerating as you integrate more AI? I know there's a lot of traffic growth at competitors with AI, but just wondering if you're seeing a real increase in total volumes of information gathering. And then second, on YouTube, thinking about kind of maybe a move from more professional content to user-generated content, what is that doing for your usage, and how do you think about the margin impact from that? Thank you.\nPhilipp Schindler: Maybe on -- Justin on Search usage overall, our metrics are healthy. We are continuing to see growth in Search on a year-on-year basis in terms of overall usage. Of course, within that, AI overviews has seen stronger growth, particularly across all segments of users, including in younger users. So it's being well received. But overall, I think through this AI moment, I think Search is continuing to perform well. And as I said earlier, we have a lot more innovations to come this year. I think the product will evolve even more. And I think as you make Search, as you give, as you make it more easy for people to interact and ask follow-up questions, et cetera, I think we have an opportunity to drive further growth.\nSundar Pichai: And some color on your YouTube question. Look, YouTube ads overall had a very healthy growth in Q4 driven by brand followed by direct response. The U.S. election advertising led brand revenue growth, and we saw nearly double the spending from 2020. I mentioned that we also had a strong contribution from finance, retail, and the tech verticals. So overall, strong operating metrics. Watch time growth remains robust, particularly in key monetization opportunity areas, such as Shorts and Living Room, just to set the stage here one more time. On your question specifically on the UGC side, look, we have a very strong position with creators and we've always said creators are at the center of YouTube success here. They're the number one most important thing we care about and this strong position really gives us a lot of confidence here. Today we have more than 3 million channels that are actually in the YouTube Partner Program, which is really an incredible program. So we're very confident with the position we have and where this goes.\nJustin Post: Thank you.\nOperator: And our last question comes from Ken Gawrelski with Wells Fargo. Your line is now open.\nKen Gawrelski: Thank you very much. Two, please. I want to focus on Gemini and the consumer agent side. Sundar, there was some press reports that suggested you have an ambitious goal on growing the usage by the end of '25. Two questions on that, please. First, what’s -- how should we think about the approach that you're going to employ to achieve this goal? Is it more aggressive marketing for Gemini as a standalone product, or is it tighter integration into existing experiences, whether it be search mail, maps, et cetera. And then the second one is, how should we think about the future monetization opportunity of Gemini? Today, it's really a premium subscription offering or a free offering. Over time, do you see an ad component and anything you can share on that, please? Thank you.\nSundar Pichai: First of all, we've had strong momentum for Gemini on the app side, particularly through the second half of 2024. And some of it is we've made it more easily accessible. We've brought it to, for example, with a dedicated app on iOS, which has been super positively received and definitely getting a lot of traction there. So definitely driving organic growth by putting the product out. We just last week rolled out with our 2.0 series of models. So 2.0 Flash, I mean, I think that's one of the most capable models you can access at the free tier. So that's definitely contributing as well. And so we are rapidly trading. We've had a couple of key innovations there. Gemini Live, I think, has been definitely a hit with users, as well as for advanced users, Gemini Deep Research. So I think a combination of innovation, continually trading on the product and making it better, is driving a lot of usage. And we'll have a lot more to come as we go this year. And we obviously have a partnership with Samsung, so there are other things which will contribute to it as well. On the monetization side, obviously for now we are focused on a free tier and subscriptions, but obviously as you've seen in Google over time, we always want to lead with user experience, We do have very good ideas for native ad concepts, but you will see us lead with the user experience. But I do think we're always committed to making the products work and reach billions of users at scale. And advertising has been a great aspect of that strategy. And so just like you've seen with YouTube, we'll give people options over time. But for this year, I think you will see us be focused on the subscription direction.\nKen Gawrelski: Thank you.\nOperator: Thank you and that concludes our question-and-answer session for today. I would like to turn the conference back over to Jim Friedland for any further remarks.\nJim Friedland: Thanks everyone for joining us today. We look forward to speaking with you again on our first quarter 2025 call. Thank you and have a good evening.\nOperator: Thank you everyone. This concludes today's conference call. Thank you for participating. You may now disconnect.",
'published': '2025-02-04',
'title': 'GOOG 2024Q4',
'author': 'GOOG'},
{'ticker': 'GOOG',
'quarter': '2024Q3',
'pub_quarter': '2024Q4',
'year': 2024,
'full_content': "Operator: Welcome, everyone. Thank you for standing by for the Alphabet Third Quarter 2024 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] I would now like to hand the conference over to your speaker today, Jim Friedland, Senior Director of Investor Relations. Please go ahead.\nJim Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's third quarter 2024 earnings conference call. With us today are Sundar Pichai, Philipp Schindler and Anat Ashkenazi. Now I'll quickly cover the Safe Harbor. Some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. And now I'll turn the call over to Sundar.\nSundar Pichai: Thank you, Jim, and hello, everyone. Q3 was another great quarter. The momentum across the company is extraordinary, as you've seen in recent product launches, and as you will hear on the call today. Our commitment to innovation as well as a long-term focus and investment in AI are paying off and driving success for the company and for our customers. We are uniquely positioned to lead in the era of AI because of our differentiated full stack approach to AI innovation, and we are now seeing this operate at scale. It has three components. First, a robust AI infrastructure that includes data centers, chips and a global fiber network. Second, world-class research teams who are advancing our work with deep technical AI research and who are also building the models that power our efforts. And third, a broad global reach through products and platforms that touch billions of people and customers around the world, creating a virtuous cycle. Let me quickly touch on each of these. We continue to invest in state-of-the-art infrastructure to support our AI efforts from the U.S. to Thailand to Uruguay. We are also making bold clean energy investments, including the world's first corporate agreement to purchase nuclear energy from multiple small modular reactors, which will enable up to 500 megawatts of new 24/7 carbon-free power. We are also doing important work inside our data centers to drive efficiencies while making significant hardware and model improvements. For example, we shared that since we first began testing AI Overviews, we have lowered machine cost per query significantly. In 18 months, we reduced cost by more than 90% for these queries through hardware, engineering and technical breakthroughs while doubling the size of our custom Gemini model. And of course, we use and offer our customers a range of AI accelerator options, including multiple classes of NVIDIA GPUs and our own custom-built TPUs. We are now on the sixth generation of TPUs known as Trillium and continue to drive efficiencies and better performance with them. Turning to research. Our team at Google DeepMind continues to drive our leadership. Let me take a moment to congratulate Demis Hassabis and John Jumper on winning the Noble Prize in chemistry for their work on AlphaFold. This is an extraordinary achievement and underscores the incredible talent we have and how critical our world-leading research is to the modern AI revolution and to our future progress. Also, congratulations to Jeff Vinton, who spent over a decade here on winning the Noble Prize in physics. Our research teams also drive our industry-leading Gemini model capabilities, including long context understanding, multimodality and agentive capabilities. By any measure, token volume, API calls, consumer usage, business adoption, usage of the Gemini models is in a period of dramatic growth. And our teams are actively working on performance improvements and new capabilities for our range of models. Stay tuned. And they are building out experiences where AI can see and reason about the world around you. Project Astra is a glimpse of that future. We are working to ship experiences like this as early as 2025. We then work to bring those advances to consumers and businesses. Today, all seven of our products and platforms with more than 2 billion monthly users use Gemini models. That includes the latest product to surpass the 2 billion user milestone Google Maps. Beyond Google's own platforms, following strong demand, we are making Gemini even more broadly available to developers. Today, we shared that Gemini is now available on GitHub Copilot with more to come. To support our investments across these three pillars, we are organizing the company to operate with speed and agility. We recently moved the Gemini app team to Google DeepMind to speed up deployment of new models and streamline post-training work. This follows other structural changes that have unified teams in research, machine learning infrastructure and our developer teams, as well as our security efforts and our platforms and devices team. This is all helping us move faster. For instance, it was a small dedicated team that built Notebook LM, an incredibly popular product that has so much promise. We're also using AI internally to improve our coding processes, which is boosting productivity and efficiency. Today, more than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers. This helps our engineers do more and move faster. I'm energized by our progress and the opportunities ahead, and we continue to be laser-focused on building great products. Let me turn now to the quarterly highlights. In search, recent advancements, including AI Overviews, Circle to Search and new features in Lens are transforming the user experience, expanding what people can search for and how they search for it. This leads to users coming to search more often for more of their information needs, driving additional search queries. Just this week, AI Overview started rolling out to more than 100 new countries and territories. It will now reach more than 1 billion users on a monthly basis. We are seeing strong engagement, which is increasing overall search usage and user satisfaction. People are asking longer and more complex questions and exploring a wider range of websites. What's particularly exciting is that this growth actually increases over time as people learn that Google can answer more of their questions. The integration of ads within AI Overviews is also performing well, helping people connect with businesses as they search. Circle to Search is now available on over 150 million Android devices with people using it to shop, translate text and learn more about the world around them. A third of the people who have tried Circle to Search now use it weekly, a testament to its helpfulness and potential. Meanwhile, Lens is now used for over 20 billion visual searches per month. Lens is one of the fastest-growing query types we see on search because of its ability to answer complex multimodal questions and help in product discovery and shopping. For all these AI features, it's just the beginning, and you will see a rapid pace of innovation and progress here. Next, Google Cloud. I'm very pleased with our growth. This business has real momentum and the overall opportunity is increasing as customers embrace GenAI. We generated Q3 revenues of $11.4 billion, up 35% over last year with operating margins of 17%. Our technology leadership and AI portfolio are helping us attract new customers, win larger deals and drive 30% deeper product adoption with existing customers. Customers are using our products in five different ways. First, our AI infrastructure, which we differentiate with leading performance driven by storage, compute and software advances, as well as leading reliability and a leading number of accelerators. Using a combination of our TPUs and GPUs, LG AI research reduced inference processing time for its multimodal model by more than 50% and operating costs by 72%. Second, our enterprise AI platform, Vertex, is used to build and customize the best foundation models from Google and the industry. Gemini API calls have grown nearly 40x in a 6-month period. When Snap was looking to power more innovative experiences within their My AI chatbot, they chose Gemini's strong multimodal capabilities. Since then, Snap saw over 2.5 times as much engagement with My AI in the United States. Third, customers use our AI platform together with our data platform, BigQuery, because we analyze multimodal data no matter where it is stored with ultra-low latency access to Gemini. This enables accurate real-time decision-making for customers like Hiscox, one of the flagship syndicates in Lloyd's of London, which reduced the time it took to code complex risks from days to minutes. These types of customer outcomes, which combine AI with data science have led to 80% growth in BigQuery ML operations over a 6-month period. Fourth, our AI-powered cybersecurity solutions, Google Threat Intelligence and Security operations are helping customers like BBVA and Deloitte prevent, detect and respond to cybersecurity threats much faster. We have seen customer adoption of our Mandiant-powered threat detection increased 4x over the last 6 quarters. Fifth, in Q3, we broadened our applications portfolio with the introduction of our new customer engagement suite. It's designed to improve the customer experience online and in mobile apps, as well as in call centers, retail stores and more. A great example is Volkswagen of America, who is using this technology to power its new myVW Virtual Assistant. In addition, the employee agents we delivered through Gemini for Google Workspace are getting superb reviews. 75% of daily users say it improves the quality of their work. Moving now to YouTube. For the first time ever, YouTube's combined ad and subscription revenue over the past four quarters has surpassed $50 billion. Together, YouTube TV, NFL Sunday Ticket and YouTube Music Premium are driving subscription growth for the platform. And we are leaning into the living room experience with multi-view and a new option for creators to organize content into episodes and seasons, similar to traditional TV. At Made on YouTube, we announced that Google DeepMind's most capable model for video generation VO is coming to YouTube Shorts to help creators later this year. Next, platforms and devices. Gemini's deep integration is improving Android. For example, Gemini Live lets you have free flowing conversations with Gemini. People love it. It's available on Android, including Samsung Galaxy devices. We continue to work closely with them to deliver innovations across their newest devices with much more to come. At Made by Google, we unveiled our latest Pixel 9 series of devices featuring advanced AI models, including Gemini Nano. We have seen strong demand for these devices, and they've already received multiple awards. Turning to Other Bets. I want to highlight Waymo, the biggest part of our portfolio. Waymo is now a clear technical leader within the autonomous vehicle industry and creating a growing commercial opportunity. Over the years, Waymo has been infusing cutting-edge AI into its work. Now each week, Waymo is driving more than 1 million fully autonomous miles and serves over 150,000 paid rides. The first time any AV company has reached this kind of mainstream use. Through its expanded network and operations partnership with Uber in Austin and Atlanta, plus a new multiyear partnership with Hyundai, Waymo will bring fully autonomous driving to more people and places. By developing a universal driver, Waymo has multiple paths to market. And with its sixth generation system, Waymo significantly reduced unit costs without compromising safety. Before I close, I'm delighted to welcome our new CFO, Anat. We are thrilled to have her on board, and you will hear from her shortly. And as always, I want to express my gratitude to our employees worldwide. Your dedication and hard work have made this another exceptional quarter for Alphabet. Now over to you, Philipp.\nPhilipp Schindler: Thanks, Sundar, and hello, everyone. I'll start with performance for the quarter and then describe the progress we're seeing across ads, YouTube and partnerships, highlighting the impact AI is already having on our business. Google Services delivered revenues of $76.5 billion for the quarter, up 13% year-on-year. Search and other revenues grew 12% year-on-year, led by growth in the financial services vertical due to strength in insurance, followed by retail. YouTube ads revenues grew 12% year-on-year, driven by brand, closely followed by direct response. Network revenues were down 2% year-on-year. In subscriptions, platforms and devices, year-on-year revenues were up 28%, driven by growth in subscriptions as well as the launch of our Made by Google devices in the third quarter. Before I double-click into ads, YouTube and partnerships, a few comments on search. Whether they're using their voice to find answers on the go or opening their camera to explore the world around them, people are expanding how they ask questions in search as well as the type of questions they ask. New behaviors create new opportunities to help us connect businesses and consumers via amazing commercial experiences. As GenAI expands what's possible, we continue to see a significant opportunity in search. Let me take a minute to explain why. AI really supercharges search. Our new AI-powered features make searches more helpful, and we continue to see great feedback, particularly from younger users. For example, with Circle to Search, where we see higher engagement from users aged 18 to 24. AI is expanding our ability to understand intent and connect it to our advertisers. This allows us to connect highly relevant users with the most helpful ad and deliver business impact to our customers. Let me share two new ad experiences we have rolled out alongside our popular AI-powered features in search. First, as you heard from Sundar, every month, Lens is used for almost 20 billion visual searches with 1 in 4 of these searches having commercial intent. In early October, we announced product search on Google Lens. And in testing this feature, we found that shoppers are more likely to engage with content in this new format. We're also seeing that people are turning to Lens more often to run complex multimodal queries, voicing a question or inputting text in addition to a visual. Given these new user behaviors, earlier this month, we announced the rollout of shopping ads above and alongside relevant Lens visual search results to help better connect consumers and businesses. Second, AI Overviews, where we have now started showing search and shopping ads within the overview for mobile users in the U.S. As you remember, we've already been running ads above and below AI Overviews. We're now seeing that people find ads directly within AI Overviews helpful because they can quickly connect with relevant businesses, products and services to take the next step at the exact moment they need. As I've said before, we believe AI will revolutionize every part of the marketing value chain. Let's start with creative. Advertisers now use our Gemini-powered tools to build and test a larger variety of relevant creatives at scale. Audi used our AI tools to generate multiple video image and text assets in different links and orientations out of existing long-form videos. It then fed the newly generated creatives into demand gen to drive reach, traffic and booking to their driving experience. The campaign increased website visits by 80% and increased clicks by 2.7 times, delivering a lift in their sales. Last week, we updated image generation at Google Ads with our most advanced text-to-image model, Imagine 3, which we tuned using ads performance data from multiple industries to help customers produce high-quality imagery for their campaigns. Advertisers can now create even higher-performing assets for PMax, Demand Gen app and Display campaigns. Turning to media buying. AI-powered campaigns help advertisers get faster feedback on what creatives work, where and redirect their media buying. Using Demand Gen, DoorDash tested a mix of image and video assets to drive more impact across Google and YouTube's visually immersive surfaces. They saw a 15 times higher conversion rate at a 50% more efficient cost per action when compared to video action campaigns alone. Last and most importantly, measurement. This quarter, we extended availability of our open source marketing mix model, Meridian to more customers, helping to scale measurement of cross-channel budgets to drive better business outcomes. On YouTube, we remain focused on building a platform that enables creators to thrive and unlocking a whole new world of creativity with AI. Creators are at the heart of the YouTube ecosystem and the content they are making is driving robust growth in watch time across the platform. We're also using AI to greatly improve recommendations on YouTube. Driven by Gemini, our large language models have a deeper understanding of video content and viewers' preferences. As a result, they can recommend more relevant, fresher and personalized content to the viewer. Short-form creation continues to thrive on YouTube. Shorts monetization improved again this quarter, and we continue to significantly close the gap with in-stream video, particularly in the U.S. and other more highly monetizing markets. Of all the channels uploading to YouTube each month, 70% are uploading shorts. And we recently announced a top requested feature, the ability to upload shorts up to 3 minutes long. Also, advertisers can now book first position on Shorts blocks in close to 40 markets. We're unlocking more opportunities in the living room. Our momentum here continues as we maintain our status as the number one streamer in the U.S. according to Nielsen. This is driven by the strength of our creators, such as Michelle Carr and Rhett & Link, who are increasingly crafting experiences designed specifically for the big screen, and it's paying off. The number of creators making the majority of the YouTube revenue on TV screens is up more than 30% year-on-year. YouTube is becoming a premier destination for sports watching. People come for the game and stay for the commentary and around the game content from creators like Evelyn Gonzalez, Adam W and Brad Coleman. During the Olympics, content from Paris 2024 had over 12 billion views on YouTube. More than 850 million unique viewers watched over 40 billion minutes of content with 35% on their TV screens. And recently, we kicked off our second season of NFL Sunday Ticket on YouTube TV, which continues to receive a positive reception from advertisers, our partners at the NFL and fans. We have continued to invest in our product experience with improvements to multiview and deeper integrations for fantasy football fans. Following up on my remarks from last quarter about Brandcast, we had a strong upfront performance with commitments up about 20% year-on-year. As always, let me wrap with the strong momentum we're seeing in partnerships. More and more of our partners are recognizing the breadth of our technologies and building solutions that leverage the very best of Google. For example, our recently announced strategic partnership with Vodafone Group spans Google Cloud, AI, Android ads and digital services. This multibillion-dollar partnership will bring these technologies to more than 330 million customers across Europe and Africa. We are collaborating on more than 30 initiatives across 7 areas, including generative AI from consumers, a best-in-class TV platform, hardware and cybersecurity. With that, a heartfelt thank you to Google everywhere for their extraordinary commitment and to our customers and partners for their continued collaboration and trust. Anat, welcome to the team. It's great to have you with us. Over to you.\nAnat Ashkenazi: Thank you, Philipp. And thanks, Sundar, for the words of welcome. My comments will focus on year-over-year comparisons for the third quarter, unless I state otherwise. I will start with the results at the Alphabet level and will then cover our segment results. I'll end with high-level commentary on investment at the Alphabet level. We had another strong quarter in Q3 with robust momentum across the business. Consolidated revenue increased by 15% or 16% in constant currency. Search remained the largest contributor to revenue growth, followed by a robust 35% growth in cloud. Total cost of revenue was $36.5 billion, up 10%. Tech was $13.7 billion, up 9%. We continue to see a revenue mix shift with Google Search growing at double-digit levels, while network revenue, which have a much higher TAC rate declined. Other cost of revenue was $22.8 billion, up 11%, with the increase primarily driven by content acquisition costs, primarily for YouTube, an increase in depreciation associated with higher level of investment in our technical infrastructure and higher hardware costs associated with the pull forward of our Made by Google launches from the fourth to the third quarter. Total operating expenses increased 5% to $23.3 billion. The increase was primarily driven by facilities-related charges as results of actions were taken to further optimize our office space footprint globally, followed by depreciation, partially offset by year-on-year decline in charges for legal and other matters. R&D investments increased by 11%, primarily driven by increases in compensation and depreciation expenses. Sales and marketing expenses increased 5%, primarily reflecting investment in advertising and promotional efforts related to the Made by Google launches, as well as for AI and Gemini. G&A expenses declined by 10%, primarily due to lower charges for legal and other matters. Operating income increased 34% to $28.5 billion and operating margin increased to 32%. Net income increased 34% to $26.3 billion and earnings per share increased 37% to $2.12. We're pleased with the progress we're making in reengineering our cost structure, which is reflected in our operating margin expansion this quarter, while also continuing to invest in the business to bring innovation to consumers, creators and enterprises. We delivered free cash flow of $17.6 billion for the third quarter and $55.8 billion for the trailing 12 months. Year-on-year free cash flow was negatively impacted by the following items. In 2023, we deferred cash tax payments from the second and third quarter to the fourth quarter. And in Q3 2024, we made a $3 billion cash payment related to the 2017 EC shopping fine. We ended the quarter with $93 billion in cash and marketable securities. Now turning to segment results. Google Services revenue increased 13% to $76.5 billion. Google Search and other advertising revenue increased by 12% to $49.4 billion. The robust performance of search was broad-based across verticals, led by the financial services vertical due to strength in insurance followed by retail. YouTube advertising revenue increased 12% to $8.9 billion, driven by brand, followed by direct response advertising. As Philipp mentioned, we're seeing strong momentum in YouTube, including robust growth in watch time across the platform and are excited about the new features and products we're bringing to creators. Network advertising revenue of $7.5 billion were down 2%. In the third quarter, the year-on-year growth in all our advertising revenue lines was impacted by the increase in strength in advertising revenue in Q3 of last year, in part from APAC-based retailers. Subscription platforms and devices revenue increased 28% to $10.7 billion, reflecting growth in subscription revenues, as well as the launch of our Made by Google devices in the third quarter. We continue to have significant growth in our subscription products, driven primarily by YouTube TV and YouTube Music Premium, as well as Google One, primarily due to increases in the number of paid subscribers. With regards to platforms, we're pleased with the performance in play, primarily driven by an increase in buyers. Google Service operating income increased by 29% to $30.9 billion, and operating margin was 40%. Turning to the Google Cloud segment, which continued to deliver very strong results this quarter. Revenue increased by 35% to $11.4 billion in the third quarter, reflecting accelerated growth in GCP across AI infrastructure, generative AI solutions and core GCP products. Once again, GCP grew at a rate that was higher than cloud overall. We also saw strong Google Workspace growth, primarily driven by increases in average revenue per seat. As you just heard from Sundar, the robust innovation and expanded AI offerings within our cloud business are allowing existing and new customers to realize measurable business benefits, including reduced cost, greater customer engagement, faster response time and better revenue conversion. Google Cloud operating income increased to $1.9 billion and operating margin increased to 17%. The operating margin expansion was driven by strong revenue performance across cloud AI products, core GCP and Workspace, as well as ongoing efficiency initiatives. As to our Other Bets, for the third quarter revenue were $388 million and operating loss was $1.1 billion. I'll highlight just a couple of accomplishments in the quarter for Waymo and Wing. We're excited about the progress we're seeing in Waymo, as Sundar mentioned, and the increase in the number of paid rides. We're planning to continue to expand our geographic coverage and reach more customers in existing markets and new markets. Wing, our drone delivery company, recently passed the 1-year anniversary of scaling its partnership with Walmart in the Dallas-Fort Worth area, now operating in 11 stores and serving 26 different cities and towns. Turning to Alphabet level activities. The largest component of this line is our investment in AI research and development activities, which support all of Alphabet. There were two notable items that impacted the operating loss in Alphabet level activities. First, a $607 million charge related to decisions we've made to further optimize our physical footprint and office space globally; and second, our ongoing investments in AI R&D, including the full quarter effect of the organizational changes we've made in May to move some additional AI teams from Google Services to Google DeepMind. With respect to CapEx, our reported CapEx in the third quarter was $13 billion, reflecting investment in our technical infrastructure with the largest component being investment in servers, followed by data centers and networking equipment. Looking ahead, we expect quarterly CapEx in the fourth quarter to be at similar levels to Q3, keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. Our expansion of data center capacity is expected to bring economic benefits to countries and communities where we are investing. In the third quarter alone, we made announcements of over $7 billion in planned data center investments with nearly $6 billion of that in the U.S. In Q3, we also returned value to shareholders in the form of $15.3 billion in share repurchases and $2.5 billion in dividend payments. Overall, we returned a total of nearly $70 billion over the trailing 12 months to shareholders. As we look forward, we're working to balance our investments in AI and other growth areas with the cost discipline needed to fund those activities. As we think about the remainder of 2024, there are a couple of dynamics to consider. In terms of revenue, year-on-year growth in advertising revenue will continue to be impacted by the increasing strength in advertising revenue in the second half of 2023, in part from APAC-based retailers. And there will be a headwind to year-over-year growth in subscription platforms and devices revenue in the fourth quarter due to the pull forward of our Made by Google launches into the third quarter this year. In terms of expenses, we'll continue to see increases in depreciation and expenses associated with higher level of investment in our technical infrastructure, partially offset by a slight benefit from the cost revenue associated with our devices due to the pull forward of hardware launches into Q3. Now before going into Q&A, as the new CFO, I would like to share a few thoughts on how I'm approaching and thinking through growth, cost structure and capital allocation and expect to hear more from me on these topics in the coming quarters. As I look at the business, I see opportunities for further growth propelled by AI and the underlying momentum across the business. You heard about some of these on the call today. I also believe that we are well positioned to deliver meaningful innovation, which will translate to revenue given our strength in the core pillars that are required to succeed in AI at scale. Realizing those opportunities and great innovation in AI requires global reach, which we have through our products and platforms, as well as continued meaningful capital investment. And while we have a strong balance sheet to be able to support these investments, we will be looking for efficiencies so that we can fund innovation in priority areas. Sundar, Ruth and our leadership team started important work to reengineer our cost structure including efforts such as optimizing our headcount growth, our physical footprint, improving the efficiencies of our technical infrastructure and streamlining operations across the company through the use of AI. I plan to build on these efforts, but also evaluate where we might be able to accelerate work and where we might need to pivot to free up capital for more attractive opportunities. Thank you. Sundar, Philipp and I will now take your questions.\nOperator: Thank you. [Operator Instructions] And our first question comes from Brian Nowak with Morgan Stanley. Your line is now open.\nBrian Nowak : Thanks for taking my questions. I have a two-parter, Sundar. The first one, over the course of the last year plus, you've sort of showcased a lot of different types of new GenAI enabled search products to sort of reimagine the search experience. Can you help us hone in on one or two 0these products that you're most excited about that you think over the next 2 to 3 years could really lead to more durable multiyear search growth once they scale? And then the second one, just as we're sort of thinking through constraints to how quickly they come out, what are sort of the key constraints that you see to really reimagining search and scaling it out across 2 billion to 3 billion people? Thanks.\nSundar Pichai: Thanks, Brian. Great question. Look, it's been an extraordinary year of innovation. I mentioned in my remarks about Circle to Search Lens now with video search approaching over 20 billion queries a month and obviously, AI Overviews. And with each of these changes, we are definitely expanding what's possible in search. And it's been really heartening to see users adapt. They understand they can ask more queries. They come back more often. And so - and we have seen growth there. I think we are with very - while we've rolled out AI Overviews to over 1 billion users, there is a lot more innovation there we are actively working on. So I expect search to continue to evolve significantly in 2025, both in the search product and in Gemini. And so I think that's the opportunity ahead. I think we are in early days of what is a powerful new technology. And with it, I think we can do a lot more for our users, but at the same time, underpin it on the foundational bedrock of quality and trust and user experience, which we have always done. So we are at 1 billion people. I don't necessarily see a constraint there. Obviously, things like latency, cost per query, et cetera. But as you've seen us over the past 18 months make substantial progress. So we'll continue rolling it out more, and we'll keep evolving it. I think search, if I were to take a 12-month outlook, I think is going to continue to evolve and we'll be at the forefront of that innovation.\nOperator: Our next question comes from Doug Anmuth with JPMorgan. Your line is now open.\nDoug Anmuth: All right. Thanks for taking the question. Perhaps for Sundar and Anat. Can you talk more about the infrastructure advantages and CapEx efficiencies you've generated from Google's own TPUs? And how does that influence your CapEx spending going forward relative to peers and other leading cloud service providers? Thanks.\nSundar Pichai: Thanks, Doug. I'll take the first part and Anat can give color on the CapEx spending part. Look, I think one of the - we are well positioned because in our AI infrastructure, we have a comprehensive solution set, right? We have all the leading AI accelerators GPUs, TPUs as well as CPUs, and we are investing in all of them. We have a wonderful partnership with NVIDIA. We are excited for the GB200s, and we'll be one of the first to provide it at scale. On the TPU front, I think we have - not only are we in our sixth generation. I just spent some time with the teams on the road map ahead. I couldn't be more excited at the forward-looking road map, but all of it allows us to both plan ahead in the future and really drive an optimized architecture for it. And I think because of all this, both we can have best-in-class efficiency, not just for internal at Google, but what we can provide through cloud, and that's reflected in the growth we saw in our AI infrastructure and GenAI services on top of it. So I'm pretty excited about how we are set up, and we'll continue executing there. And maybe Anat can give comments on the CapEx spending.\nAnat Ashkenazi: Yeah, sure. So let me provide a little more color on our capital investments and certainly an important area in the - this time of investments in AI. As you saw in the quarter, we invested $13 billion in CapEx across the company. And as you think about it, really it's divided into two categories. One is our technical infrastructure, and that's the majority of that $13 billion. And the other one goes into areas such as facilities, the Bets and other areas across the company. Within TI, we have investments in servers, which includes both TPUs and GPUs. And then the second categories are data centers and networking equipment. This quarter, approximately 60% of that investment in technical infrastructure went towards servers and about 40% towards data center and networking equipment. And as you think about them, we offer both GPUs and TPUs both internally and to our customers. So we have choices and options based on what our customer needs and what our internal needs are. And as you think about the next quarter and going into next year, as I mentioned in my prepared remarks, we will be investing in Q4 at approximately the same level of what we've invested in Q3, approximately $13 billion. And as we think into 2025, we do see an increase coming in 2025, and we will provide more color on that on the Q4 call, likely not the same percent step-up that we saw between '23 and '24, but additional increase.\nSundar Pichai: The one other thing I would add on the - Doug, on your first part of the question on the TPUs is if you look at the flash pricing we have been able to deliver externally, I think - and how much more attractive it is compared to other models of that capability, I think probably that gives a good sense of the efficiencies we can generate from our architecture. And so - and we are doing the same that for internal use as well. The models for search, while they keep going up in capability, we've been able to really optimize them for the underlying architecture, and that's where we are seeing a lot of efficiencies as well.\nDoug Anmuth: Thank you.\nOperator: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open.\nEric Sheridan: Thank you for taking the question. And Anat congrats on the new role. And welcome to Alphabet. Sundar, maybe one for you on Waymo. What are the key learnings as Waymo has rolled out to additional cities in terms of consumer adoption of the product and how you think about go-to-market strategies for Waymo? And then maybe one for Philipp. In terms of looking at YouTube trends by long-form versus short-form video or shorts, how are you seeing consumption versus monetization trends continue to evolve for YouTube as broken down maybe in that means? Thank you.\nSundar Pichai: Thanks, Eric. On Waymo, obviously, it's been an exciting year, both in the Phoenix market and in San Francisco. We've definitely scaled and particularly scaled paid rides and definitely surprised us on the positive in terms of how much consumers are loving the experience from a safety standpoint, privacy standpoint, reliability standpoint, et cetera. So I think all of that has been on the positive side. And obviously, the product will continue to improve. So for us, we are mainly focused on each city as we go, the pace at which we can now do additional city gets easier. So we are definitely accelerating that way. That's why we - you've seen us move into L.A. We're also striking partnerships in newer and unique ways. Hence, the Uber partnership and expansion to Austin and Atlanta. And we have more options where we are looking at the driven by Waymo model with other network partners, fleet managers, et cetera. So it's an exciting moment, but we are still obviously being safety focused, but are looking to scale and testing out a variety of models and which will help us plan ahead well for 2025 and beyond.\nPhilipp Schindler: Yes. And to your question on YouTube Shorts, consumption versus monetization, maybe we start with the watch time. It continues to grow actually across YouTube with particular strength in shorts and in the living room. Just to give you a number, over 70 billion YouTube Shorts are watched every day. On the monetization side, the monetization rate of shorts relative to in-stream viewing is continuing to show a healthy rate of growth. The gap continues to narrow, particularly in the U.S. We also see it in other more highly monetizing markets. And we continue to work very closely with our advertisers. We're committed to providing them with very effective ways to reach the growing audience here. I talked about advertisers now being able to book first position on Shorts blocks. That's exciting. Shorts are also integrated into video reach campaigns, YouTube Select. So you're really giving brands the precise targeting options here. So yeah, we are pleased with the progress we're making here.\nOperator: Our next question comes from Ross Sandler with Barclays. Your line is now open.\nRoss Sandler: Hi, everybody. Thanks for taking the questions. Congrats, Anat. Two, if that's okay. So first, Sundar, given the high stakes around native AI product usage, are there any milestones you can share around where Gemini usage is compared to the 250 million weekly active users that ChatGPT is seeing right now? And then the second question is, I'm sure this is something you guys have been thinking about for a while, but it looks like the way that the Google versus DOJ search trial is going, there's a decent likelihood that the Apple ISA contract and some of the Android pre-install contracts are going to be voided out at some point in the future. So I guess the question is, what plans do we have in place to recapture some of the usage that might be going away in those search access points? How can we gain share on iOS queries if the Safari toolbar access point were to change? Thank you very much.\nSundar Pichai: Thanks, Ross. Look, I think, you know, obviously, we are serving Gemini across a lot of touch points, including it's now over 1 billion people are using it in search accessing. We are getting it across our products. The Gemini app itself has very strong momentum on user growth. Our API volume, I commented on the Gemini APIs having gone up 14x in the past 6 months. So we are seeing growth across the board. And the Gemini integration into Google Assistant is going super well on Android. The user feedback is positive. So we are continuing to roll that out more. So I think we'll - you will see us we are investing in the next generation of models. And as part of that, we are investing in scaling up the usage of the - both directly to the models as both on the consumer and the developer side. So I think I'm pleased with the momentum there. On the second - on the legal trials, obviously, I don't want to - it's not appropriate for me to speculate given it's in the middle of ongoing litigation. But what I would say is stepping back, look, we've always and even as the court acknowledged, clearly, we have reached a position of success because we have deeply innovated, and we are continuing to do so. People have chosen us because they view it as the best product, be it consumers or partners. And we have a long track record of working hard to make sure our products are as easily available to users as possible across all platforms. So all that approach and all the learnings over the years, I think, will all be - will give us a strong foundation. First of all, we plan to vigorously defend these cases. And some of the early proposals from the DOJ, et cetera, have been far reaching. And we plan to - I think they could have unintended consequences, particularly to the dynamic tech sector and the American leadership there. And so we plan to be - we plan to engage very vigorously there. Thanks.\nRoss Sandler: Thank you.\nOperator: Your next question comes from Justin Post with BAML. Your line is now open.\nJustin Post: Great. Thank you. I wanted to ask a little bit more about AI Overviews, maybe two parts. You mentioned you're seeing increasing queries or activity. Could you help us understand that for the billion users who have had access to the product, what you're seeing there? And then on the monetization side, is there a chance that AI Overviews would help monetize some of the information queries that maybe you weren't making much monetization from with old formats? Thank you.\nSundar Pichai: Thanks, Justin. Look, I think the main thing I would say is as we have rolled out, we're obviously now scaling it out. We just rolled it out to 100 new countries and territories, and that's what will get us to billion users. But amongst the users where we had already rolled out, we clearly see strong engagement. It's one of the most positive user satisfaction launches we have done in search. And it is increasing overall search usage, like people are asking more complex questions, different types of questions. They are exploring a wider range of websites. And what's particularly exciting is that this growth actually increases over time as people learn to adapt to that new behavior. So I'll stick to those comments. And I think - to the second part of your question on the monetization side, I think Philipp can answer more of that. Philipp?\nPhilipp Schindler: Yeah. So look, the transition here is working well, including for ads. As you know, we recently launched ads within AI Overviews on mobile in the U.S. And this really builds on our previous rollout of ads above and below the AI Overviews. So overall, for AI Overviews, we see monetization at approximately the same rate, which gives us a really strong base on which we can innovate even more. And specifically to your question of monetizing queries where we can monetization potentially at the moment, yes, I can see that there is opportunity for that.\nJustin Post: Thank you.\nOperator: Your next question comes from Michael Nathanson with MoffettNathanson. Your line is now open.\nMichael Nathanson: Thanks. I have one for Sundar. Sundar, there was this perception and even false that Alphabet was not as innovative on AI as they should. And it clearly shows that that was wrong. You're moving pretty quickly rolling out new products. Can you talk a bit about how you may have changed your structure? I know you've combined some assets, but talk a bit about how you've maybe rethought how you go to market with some of your innovation products? And maybe what's changed operationally as AI has picked up steam for you guys?\nSundar Pichai: Thanks, Michael. Look, I definitely think it's an extraordinary opportunity. And I think the company, given the important moment, we had to gear up to build models from scratch that could be productionized at scale on our architecture. And that's what the Gemini era was about. So there was a fixed cost of getting it all set up and getting the Gemini era underway. But now I think we are in much more of a virtuous cycle with a lot of velocity in the underlying models. We've had two generations of Gemini model. We are working on the third generation, which is progressing well. And teams internally are now set up much better to consume the underlying model innovation and translate that into innovation within their products. So now all the seven products, which have 2 billion users each have done their first versions of incorporating Gemini, and there is aggressive road map ahead for 2025. I mentioned earlier, search alone. I think there's a lot more we can do. And we are also enabling smaller teams to ship newer experiences and Notebook LM was the first instantiation of those types of efforts as well. Through it all, within, we had to do this when the company evolved from desktop to mobile. We are restructuring the company. Effectively, if you think of Google as a neural network, we are forming new synapses, which work much better to adapt to this moment. And I think that sets us up well for the year ahead. And we are bringing all of this innovation to the outside world through cloud as well. And so we are going to do that. And so that's an additional opportunity at this moment.\nMichael Nathanson: Thanks, Sundar.\nOperator: Our next question comes from Mark Mahaney with Evercore. Your line is now open.\nMark Mahaney: Okay. I'd like to ask two questions, please, to Anat. First, the margins at cloud have really started to ramp nicely. There are comps in the industry with still materially higher operating margins. I imagine that's a matter of scale and trying to catch up from a third place position. But how do you think about the margin trends that you're seeing? And what's your level of confidence that those margins can kind of match up to other industry players that are doing closer to 30% margins? And then secondly, just across the board, when you think about the business that's running at, what, 32% operating margins this last quarter, and you come in looking at this fresh, is it clear to you that there are a lot of kind of newfound cost efficiencies or ongoing cost efficiencies? Like what do you see as the biggest opportunities to kind of take those margins and maybe over time, take them materially higher? Thank you very much.\nAnat Ashkenazi: Thanks, Mark, for both of these questions. Let me start on the cloud margin. So certainly, very pleased to see not just the top line growth rate, but the margin expansion to 17%, really outstanding work by our cloud team to drive continued benefit to customers. And as you think about that margin expansion, really, it's a few things. You've mentioned one of them. The first is scale. Obviously, as we scale the business, we have more opportunity for margin expansion. But the second, and shouldn't be underestimated is the work the team has done to drive efficiencies across the cloud business, and we're seeing those come through, whether it's through headcount management or facilities management, other process efficiencies. We're seeing that go to the bottom line and driving the results you're seeing this quarter. Hard to obviously compare to any of our peers or competitors. It's a different business, but more to come. Now the one thing to remember, and I mentioned this in my prepared remarks, this is an area that requires investment. And a lot of these investments, you think about servers, et cetera, is based on demand we're seeing from customers. So this will translate to revenue in the fairly short term. But that means there are headwinds associated with the - overall, the annual run rate or costs associated with these investments, whether it's in the form of depreciation or just construction costs that are not capitalized, et cetera. So we'll continue to drive efficiency in the business to try and offset some of these. But this is how I'm thinking about the dynamics for cloud. Overall, for the business, this is one of my key priorities is to look across the organization to see what we can do in terms of driving further efficiencies. There's really good work that was done started by Ruth, Sundar and the rest of the lead team to reengineer the cost base. But I think any organization can always push a little further. And I'll be looking at additional opportunities really across all the elements that I've mentioned in my prepared remarks, think not just about the size of the organization, but mostly how we operate and how we run the business. And I think when you simplify the organization, Sundar just made a few comments on that. When we use AI within our own processes and how we get work done, there are some efficiencies or opportunities for efficiencies. Now all of that will go against substantial increases in capital investment, as I've mentioned, going into 2025. And again, I'll give more color when we are on the Q4 call. So hopefully, we'll be able to drive efficiencies to work towards offsetting some or all of that increase.\nMark Mahaney: Thank you very much.\nOperator: Our next question comes from Ken Gawrelski with Wells Fargo. Your line is now open.\nKen Gawrelski: Thank you so much. Two, if I may. First, just on search, why does it make sense to have completely - why doesn't it make sense to have two completely different search experiences. One, an agent-like answers engine, and then two, a links-based more traditional search engine. You could innovate on both and let the consumer decide. It's - maybe think of it as the ultimate A/B test. So I'd be curious to get your thoughts there. And then the second, if you could touch a little bit on the consumer environment in 4Q. Perhaps nobody has a better view into the health of the consumer in multiple verticals. If you could talk a little bit about - you talked about tougher comps on the Asia e-commerce side, but any other trends you could point out be around the election or fewer holiday days this year, that would be really helpful. Thank you.\nSundar Pichai: Why don't I take the first part and then Philipp can give color on the consumer vertical trends. On the first part, look, in this moment, people are using a lot of buzzwords like answer engines and all that stuff. I mean, Google started answering questions about 10 years ago in our search product with featured snippets. So look, I think ultimately, you are serving users. User expectations are constantly evolving. And we work hard to stay a step ahead, anticipate and stay a step ahead. And this is why we've kind of really brought multimodality on the input side and the output side in search pretty natively. And so we'll continue expanding innovations there. I do think having two surfaces for us allows us to experiment more. And there are - I view this moment as moment in which there are new use cases which we will be able to do, which we couldn't have done before. And so having the flexibility, having product surfaces where we can move very, very fast, I think, is actually helpful. And so we are embracing it and going to lean into this moment like we have done in the past year, and I think that will play out well for users. Philipp?\nPhilipp Schindler: Yes. On the vertical trends, look, I called out search and other revenues being led by growth in the financial services due to improved economics in the insurance industry, followed by retail. But I think it's fair to say, in general, we saw broad-based strength across all verticals, maybe specifically to election-related ad spend. We had a slight tailwind from election-related ad spend in the third quarter, which was a little bit more pronounced in YouTube ads.\nOperator: And our last question comes from Stephen Ju with UBS. Your line is now open.\nStephen Ju: Thank you so much. Hi, Sundar. I think in two separate blog posts from Google Cloud, talking about the real-life use cases for GenAI, I think you highlighted what was a pretty material increase in a number of companies that are starting to turn their, I guess, ideas into products. I think it was like an 80% increase in the 6-month period. And I think you guys also published some survey data saying that your customers are generating tangible ROI there. So can you update us on what you're seeing in terms of sales cycles, perhaps accelerating? And how much of the heavy lifting the cloud team may have to do to help your customers turn those ideas into reality more quickly? And Philipp, I think one of the feedbacks that we're getting from advertisers is that while the initial use case for PMax for them was in search, they're starting to use it more and more for mid and upper funnel campaigns and budgets as well. So can you talk about whether that's an anecdote or something that you're already seeing perpetuate among all of your advertisers? Thank you.\nSundar Pichai: On the cloud side, look, I think you - sorry, on the cloud side, look, I do think you hinted in your question itself. Definitely, customers are leaning in this moment, wherever we have been working, we are definitely seeing real concrete proof points delivering real impact, right, be it in their user experience, be it in the bottom line, et cetera. And so I gave a few examples on my remarks. And I think customers are getting savvier. We ourselves are going through a lot of learnings, both in deploying this within Google as an enterprise and bringing those learnings to our customers outside. And as we see common patterns across the breadth of sectors we serve in, I think we are bringing those learnings. So I would say, if anything, I think over time, I think organizations are beginning to understand more. They are leaning in. Our models are getting better. We are building more comprehensive solutions on top of it. So I think we are well set up for 2025, and I think there will be continued momentum in this area.\nPhilipp Schindler: And on the PMax side, look, we continue to see success with PMax. And we see those success stories really from large advertisers, from agencies, from SMBs across marketing objectives, across different verticals. It's very cost effective, and it really finds customers wherever they are across all the different Google channels. And with the introduction of Gemini, we added a lot of new features to PMax. For example, to deliver more powerful performance, help advertisers scale, build high-quality creative assets and so on. But going directly to your question on the funnel, also keep in mind, we have a great product with Demand Gen that is all about inspiring consumers beyond the initial awareness and to take action. And we think Demand Gen is actually a very powerful tool to win in today's marketplace with marketers, and we can't wait to see actually what more value it will drive.\nStephen Ju: Thank you.\nOperator: Thank you. And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks.\nJim Friedland: Thanks, everyone, for joining us today. We look forward to speaking with you again on our fourth quarter 2024 call. Thank you, and have a good evening.\nOperator: Thank you, everyone. This concludes today's conference call. Thank you for participating. You may now disconnect.",
'published': '2024-10-29',
'title': 'GOOG 2024Q3',
'author': 'GOOG'},
{'ticker': 'GOOG',
'quarter': '2024Q2',
'pub_quarter': '2024Q3',
'year': 2024,
'full_content': "Operator: Welcome, everyone. Thank you for standing by for the Alphabet Second Quarter 2024 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] I would now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead.\nJim Friedland : Thank you. Good afternoon everyone and welcome to Alphabet's Second Quarter 2024 Earnings Conference Call. With us today are Sundar Pichai, Philipp Schindler, and Ruth Porat. Now, I'll quickly cover the Safe Harbor. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. And now I'll turn the call over to Sundar.\nSundar Pichai : Thank you, Jim. And hello, everyone. I'm really pleased with our results this quarter. They showed tremendous ongoing momentum in Search and great progress in Cloud with our AI initiatives driving new growth. Search had another excellent quarter. And in terms of product innovation, we are seeing great progress with AI overviews. In Q2, Cloud reached some major milestones. Quarterly revenues crossed the $10 billion mark for the first time, at the same time pass the $1 billion mark in quarterly operating profit. Year-to-date, our AI infrastructure and generative AI solutions for Cloud customers have already generated billions in revenues and are being used by more than 2 million developers. As I spoke about last quarter, we are uniquely well-positioned for the AI opportunity ahead. Our Research and Infrastructure leadership means, we can pursue an in-house strategy that enables our product teams to move quickly. Combined with our model building expertise, we are in a strong position to control our destiny, as the technology continues to evolve. Importantly, we are innovating at every layer of the AI stack, from chips to agents and beyond, a huge strength. We are committed to this leadership long-term. This was underscored by the announcements we made at I/O, Cloud Next, and Google Marketing Live, and we'll touch on many of them here. Today, I'll start with Search, then move to our AI momentum more generally, followed by Cloud, YouTube, and some closing thoughts. Let's dive in. Over the past 25 years, we have continued to reimagine and expand Google Search across many technological shifts. With AI, we are delivering better responses on more types of search queries and introducing new ways to search. We are pleased to see the positive trends from our testing continue as we roll out AI overviews, including increases in search usage, and increased user satisfaction with the results. People who are looking for help with complex topics are engaging more and keep coming back for AI overviews. And we see even higher engagement from younger users, aged 18 to 24, when they use search with AI overviews. As we have said, we are continuing to prioritize approaches that send traffic to sites across the web. And we are seeing that ads appearing either above or below AI overviews, continue to provide valuable options for people to take action and connect with businesses. Beyond AI overviews, AI expands the types of queries we are able to address and opens up powerful new ways to search. Visual search via Lens is one. Soon you'll be able to ask questions by taking a video with Lens. And already we have seen that AI overviews in Lens, leads to an increase in overall visual search usage. Another example is Circle to Search, which is available today on more than 100 million Android devices. We are seeing tremendous momentum from our AI investments. More than 1.5 million developers are now using Gemini across our developer tools. And we recently unveiled new models that are more capable and efficient than ever. Gemini now comes in 4 sizes, with each model designed for its own set of use cases. It's a versatile model family that runs efficiently on everything from data centers to devices. At 2 million tokens, we offer the longest context window of any large-scale foundation model to-date, which powers developer use cases that no other model can handle. Gemini is making Google's own products better. All six of our products with more than 2 billion monthly users now use Gemini. This means that Google is the company that's truly bringing AI to everyone. Gemini is powering incredibly helpful features in search, workspace, Google messages, and more. At I/O, we showed new features coming soon to Gmail and to Google Photos. Soon you'll be able to ask photos questions like, what did I eat at that restaurant in Paris last year? For a glimpse of the future, I hope you saw Project Astra at I/O. It shows multimodal understanding and natural conversational capabilities. We've always wanted to build a universal agent and it's an early look at how they can be helpful in daily life. Our AI product advances come from our long-standing foundation of research leadership, as well as our global network of infrastructure. In Q2, we announced our first data center and cloud region in Malaysia, and expansion projects in Iowa, Virginia, and Ohio. Our TPUs are a key bet here, too. Trillium is the sixth generation of our custom AI accelerator, and it's our best performing and most energy efficient TPU to-date. It achieves a near 5 times increase in peak compute performance per chip and a 67% more energy efficient compared to TPU v5e. And the latest Nvidia Blackwell platform, will be coming to Google Cloud in early 2025. We continue to invest in designing and building robust and efficient infrastructure to support our efforts in AI, given the many opportunities we see ahead. Of course, as we do this, we'll continue to create capacity by allocating resources towards our highest priorities. We are relentlessly driving efficiencies in our AI models. For example, over the past quarter, we have made quality improvements that include doubling the core model size for AI overviews, while at the same time improving latency and keeping cost per AI overviews served flat. And we are focused on matching the right model size to the complexity of the query in order to minimize impact on cost and latency. Separately on our real estate investments, we are taking a measured approach to match the current and future needs of our hybrid workforce, as well as our local communities. Next, Google Cloud. We continue to see strong customer interest, winning leading brands like Hitachi, Motorola Mobility, and KPMG. Our deep partnership with Oracle significantly expanded our joint offerings to the large customer base. Our momentum begins with our AI infrastructure, which provides AI startups like Essential AI, with leading cost performance for models and high-performance computing applications. We continue to drive fundamental differentiation with new advances since Cloud Next. This includes Trillium, which I mentioned earlier, and A3 Mega powered by Nvidia H100 GPUs, which doubles the networking bandwidth of A3. Our enterprise AI platform, Vertex, helps customers such as Deutsche Bank, Kingfisher, and the US Air Force build powerful AI agents. Last month, we announced a number of new advances. Uber and WPP are using Gemini Pro 1.5 and Gemini Flash 1.5 in areas like customer experience and marketing. We broaden support for third-party models, including Anthropic's Claude 3.5 Sonnet and open source models like Gemma 2, Llama and Mistral. We are the only cloud provider to offer grounding with Google Search, and we are expanding grounding capabilities with Moody's, MSCI, ZoomInfo, and more. Our AI-powered applications portfolio is helping us win new customers and drive upsell. For example, our conversational AI platform is helping customers like Best Buy and Gordon Food Service. Gemini for Workspace helps click therapeutics analyze patient feedback as they build targeted digital treatments. Our AI-powered agents are also helping customers develop better quality software, find insights from their data, and protect their organization against cybersecurity threats using Gemini. Software engineers at Wipro are using Gemini code assist to develop, test, and document software faster. And data analysts at Mercado Libre are using BigQuery and Looker to optimize capacity planning and fulfill shipments faster. Cyber security risks continue to accelerate and the number of breaches continue to grow, something we all see in the news every day and that our [Mandiant teams] (ph) help manage. Our strong track record of uptime, quality control and reliability made Google Cloud the trusted security choice for organizations like Fiserv and Marriott International. In Q2, we infused AI throughout our security portfolio, helping TELUS strengthen its proactive security posture. Turning next to YouTube, YouTube is focused on a clear strategy, connecting creators with a massive audience and enabling them to build successful businesses through ads and subscriptions, while helping advertisers reach their desired audience. We had a great brand cast this quarter, and Philip will say more. I'm pleased at the progress here. YouTube has remained number one in US Streaming watch time, according to Nielsen. Views of YouTube shots on connected TVs more than double last year. And we are making it easier for creators to add captions and turn regular videos into shots. Next, on Android and Pixel. We joined Samsung for their Galaxy Unpacked event a few weeks ago, and we shared that Samsung's new devices will include the latest AI-powered Google updates on Android. It was a great event. I'm looking forward to our Made by Google event happening in August. We'll have lots to share around Android and the Pixel portfolio of devices. Our Pixel line is doing well. We recently introduced the new Pixel 8a, powered by our latest Google Tensor G3 chip. It provides beautiful AI experiences like Circle to Search, Best Take, and a Gemini-powered AI assistant. In other bets, I'm really pleased with the progress Waymo's making, a real leader in the space and getting rave reviews from users. Waymo's served more than 2 million trips to-date and driven more than 20 million fully autonomous miles on public roads. Waymo's now delivering well over 50, 000 weekly paid public rides, primarily in San Francisco and Phoenix. And in June, we removed the waitlist in San Francisco, so anyone can take a ride. Fully autonomous testing is underway in other Bay Area locations without a human in the driver's seat. Before I close, I want to acknowledge that today is Ruth's final earnings call. Let me take a moment to thank her for all she has done for Google and Alphabet as our longest-serving CFO. I'm excited to continue to work with her in her new role. And I look forward to welcoming our newly appointed CFO, Anat Ashkenazi. She starts next week, and you'll hear from her on our call next quarter. Thanks as always to our employees and partners everywhere for a great Q2. With that, over to you, Philip.\nPhilipp Schindler : Thanks, Sundar, and hello, everyone. Starting with performance, Google Services delivered revenues of $73.9 billion for the quarter, up 12% year-on-year. Search and other revenues grew 14% year-on-year, led by growth in the retail vertical, followed by financial services. YouTube ads revenues were up 13% year-on-year driven by growth and brand as well as direct response. Network revenues declined 5% year-on-year. In subscriptions, platforms, and devices, year-on-year revenues increased 14%, driven again by strong growth in YouTube subscriptions. For the rest of my remarks, I want to double click on two topics. First, how we're applying AI across the marketing process to deliver an even stronger ads experience. Second, YouTube's position as the leading multi-format platform. So let me start by sharing some of the ways we are applying AI to bring more performance benefits to even more businesses. Q2 brought several major opportunities to meet and learn from users, developers, creators, and customers. From I/O to Brandcast, Google Marketing Live and Can, a growing number of our customers and partners are looking to understand how to successfully incorporate AI into their businesses. This quarter, we announced over 30 new ads features, and products to help advertisers leverage AI and keep pace with the evolving expectations of customers and users. Across Search, PMax, DemandGen, and Retail, we're applying AI to streamline workflows, enhance creative asset production, and provide more engaging experiences for consumers. Listening to our customers, retailers in particular have welcomed AI-powered features to help scale the depth and breadth of their assets. For example, as part of a new and easier-to-use merchant center, we've expanded Product Studio, with tools that bring the power of Google AI to every business owner. You can upload a product image from the AI with something like, feature this product with Paris skyline in the background and Product Studio will generate campaign ready assets. I also hear great feedback from our customers on many of our other new AI-powered features. We're beta testing, virtual try on and shopping ads and plan to roll it out widely later this year. Feedback shows this feature gets 60% more high-quality views than other images and a higher click-out to retailer sites. Retailers love it because it drives purchasing decisions and fewer returns. Our AI-driven profit optimization tools have been expanded to performance max and standard shopping campaigns. Advertisers use profit optimization and smart bidding see a 15% uplift in profit on average compared to revenue-only bidding. Lastly, DemandGen is rolling out to Display in Video 360 and Search Ads 360 in the coming months with new generative image tools that create stunning high-quality image assets for social marketers. As we said at GML, when paired with Search or PMax, DemandGen delivers an average of 14% more conversions. The use cases we're seeing across the industry show the incredible potential of these AI-enabled products to improve performance. Let me briefly share two examples with you. Luxury jewelry retailer Tiffany leveraged DemandGen during the holiday season and saw 2.5% brand lift in consideration and actions, such as adding items to cards and booking appointments. The campaign drove a 5.6 times more efficient cost per click compared to social media benchmarks. Our own Google marketing team used DemandGen to create nearly 4,500 ad variations for a Pixel 8 campaign shown across YouTube, Discover, and Gmail, delivering twice the click-through rate at nearly a quarter of the cost. In addition to strengthening our ads products for customers, we continue to evolve our existing systems and products with improved models delivering further performance gains. In just six months, AI-driven improvements to quality, relevance, and language understanding have improved Broad Match performance by 10% for advertisers using Smart Bidding. Also, advertisers who adopt PMax to Broad Match and Smart Bidding in their Search campaigns, see an average increase of over 25% more conversions or value at a similar cost. We'll continue to listen to our customers and use their feedback to drive innovation across our products. As you can hear, I continue to be excited about the AI era for ads. Now let's turn to YouTube. I've talked before about our approach to making YouTube the best place to create, watch and monetize. First, the best place to create. What sets YouTube apart from every other platform are the creators and the connection they have with their fans. Audiences tuning in to watch their favorite creators continue to grow. For example, two weeks ago, Mr. Beast's channel hit more than 300 million subscribers. Next, the best place to watch. Our long-term investment in CTV continues to deliver. Views on CTV have increased more than 130% in the last three years. According to Nielsen, YouTube is the Number #1 most watched streaming platform on TV screens in the US for the 17th consecutive month. Zooming out, when you look not just at streaming, but at all media companies and their combined TV viewership, YouTube is the second most watched after Disney. And this growth is happening in multiple verticals, including sports, which has seen CTV watch time on YouTube grow 30% year-over-year. Lastly, the best place to monetize. CTV on YouTube is continuing to benefit from a combination of strong watch time growth, viewer and advertiser innovation and a shift in brand advertising budgets from linear TV to YouTube. Our largest advertisers across verticals, including retail, entertainment, telco and home and personal care, are partnering with creators on ads and organic integrations. Verizon, for example, worked with a YouTube creator and Verizon customer to show them many ways that plans and offerings can be customized to fit people’s lives. Using AI-powered formats, they created sketches in multiple lengths and orientations to serve the right creative to the right viewer and drive people to their site. Verizon's creator ads had a 15% lower CPA and a 38% higher conversion rate versus other ads. Turning to Shorts. Last quarter, I shared that in the US, the monetization rate of YouTube Shorts relative to in-stream viewing is showing a healthy rate of growth. Again, this quarter, we continue to see an improvement in Shorts monetization, particularly in the US. We are also seeing a very encouraging contribution from brand advertising on Shorts, which we launched on the product in Q4 last year. Lastly, a few words on shopping. Last year, viewers watched 30 billion hours of shopping-related videos, and we saw a 25% increase in watch time for videos that help people shop. While it is early days, shopping remains a key area of investment. At GML, we rolled out several product updates to YouTube shopping, helping creators sell products to their viewers. These updates included; product tagging where creators can tag products in their videos for viewers to discover and purchase, product collections and a new affiliate hub, a one-stop shop for creators to find deals and promotional offers from brands and track their affiliate earnings. With that, I'll finish by saying a huge thank you to Google's everywhere for their extraordinary commitment and to our customers and partners for their continued collaboration and trust. And Ruth, thanks for your amazing leadership and partnership over all these years. Now for one last time, it's over to you.\nRuth Porat : Thank you, Philipp, and thanks, Sundar, for those kind words. We had another strong quarter, driven in particular by performance in Search and Cloud, as well as the ongoing efforts to durably reengineer our cost base. My comments will be on year-over-year comparisons for the second quarter unless I state otherwise. I will start with results at the Alphabet level followed by segment results and conclude with our outlook. For the second quarter, our consolidated revenues were $84.7 billion, up 14% or up 15% in constant currency. Search remained the largest contributor to revenue growth. In terms of expenses, total cost of revenues was $35.5 billion, up 11%. Other cost of revenues was $22.1 billion, up 14%, with the increase driven primarily by content acquisition costs, followed by depreciation as well as the impact of the Canadian digital services tax, which was applied retroactively. Operating expenses were $21.8 billion up 5%, primarily reflecting an increase in R&D partially offset by a decline in G&A with sales and marketing essentially flat to the second quarter last year. The increase in R&D was driven primarily by compensation which was affected by lapping a reduction in valuation-based compensation liabilities in certain other bets in the second quarter last year followed by depreciation. The largest single factor in the year-on-year decline in G&A expenses was lower charges related to legal matters. Operating income was $27.4 billion, up 26% and our operating margin was 32%. Net income was $23.6 billion and EPS was $1.89. We delivered free cash flow of $13.5 billion in the second quarter and $60.8 billion for the trailing 12 months. As a reminder, last year, we had a timing benefit in the second and third quarters from a $10.5 billion deferred cash tax payment made in the fourth quarter, which depressed reported free cash flow growth this quarter, and we'll do so again next quarter. We ended the quarter with $101 billion in cash and marketable securities. Turning to segment results. Within Google Services, revenues were $73.9 billion, up 12%. Google Search and other advertising revenues of $48.5 billion in the quarter were up 14%, led again by growth in retail, followed by the financial services vertical. YouTube advertising revenues of $8.7 billion were up 13% driven by brand followed by direct response advertising. Network advertising revenues of $7.4 billion were down 5%. Subscription platforms and devices revenues were $9.3 billion up 14%, primarily reflecting growth in YouTube subscription revenues. TAC was $13.4 billion, up 7%. Google Services operating income was $29.7 billion up 27% and the operating margin was 40%. Turning to the Google Cloud segment. Revenues were $10.3 billion for the quarter, up 29%, reflecting first significant growth in GCP, which was above growth for cloud overall and includes an increasing contribution from AI. And second, strong Google Workspace growth, primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $1.2 billion and an operating margin of 11%. As to our Other Bets for the second quarter, revenues were $365 million and the operating loss was $1.1 billion. Turning to our outlook for the business. With respect to Google Services, First, within advertising. The strong performance of search was broad-based across verticals. In YouTube, we are pleased with the growth in the quarter. We had healthy watch time growth continued to close the monetization gap in Shorts and had continued momentum in Connected TV, with brand benefiting in part from an ongoing shift in budgets from linear television to digital. As we look forward to the third quarter, we will be lapping the increasing strength in advertising revenues in the second half of 2023, in part from APAC based retailers. Turning to subscriptions, platforms and devices. First, we continue to have significant growth in our subscriptions business which drives the majority of revenue growth in this line. However, there was a sequential decline in the year-on-year growth rate, as we anniversaried the impact of a price increase for YouTubeTV in the second quarter last year. The impact will persist through the balance of the year. Second, with regard to platforms. We are pleased with the performance in play driven by an increase in buyers. Finally, with respect to devices. The most important point as we look forward is that our Made by Google launches have been pulled forward into the third quarter from the fourth quarter last year benefiting revenues in Q3 this year. Turning to cloud, which continued to deliver very strong results. For the first time, Cloud crossed $10 billion in quarterly revenues and $1 billion in quarterly operating profit. As Sundar noted year-to-date, our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than 2 million developers. We're particularly encouraged that the majority of our top 100 customers are already using our generative AI solutions. We continue to invest aggressively in the business. Turning to margins. The margin expansion in Q2 versus last year reflects our ongoing efforts to durably reengineer our cost base, as well as revenue strength. Our leadership team remains focused on our efforts to moderate the pace of expense growth in order to create capacity for the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure. Once again headcount declined quarter-on-quarter, which reflects both actions we have taken in the first half of the year and a much slower pace of hiring. Looking ahead, we expect a slight increase in headcount in the third quarter, as we bring on new graduates. As we have discussed previously, we’re continuing to invest in top engineering and technical talent, particularly in cloud and technical infrastructure. Looking forward, we continue to expect to deliver full-year 2024 Alphabet operating margin expansion relative to 2023. However, in the third quarter operating margins will reflect the impact of both the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure, as well as the increase in cost of revenues due to the pull-forward of hardware launches into Q3. With respect to CapEx, our reported CapEx in the second quarter was $13 billion, once again driven overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers. Looking ahead, we continue to expect quarterly CapEx throughout the year to be roughly at or above the Q1 CapEx of $12 billion keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. With regard to other bets, we continue to focus on improving overall efficiencies, as we invest for long-term returns. Waymo is an important example of this, with its technical leadership coupled with progress on operational performance. As you will see in the 10-Q, we have chosen to commit to a new multi-year investment of $5 billion. This new round of funding, which is consistent with recent annual investment levels will enable Waymo to continue to build the world's leading autonomous driving technology company. To close, this is my 56th and last earnings call, 37 of them at Alphabet. So I have a few closing thoughts of gratitude. I've been so proud to be at Google and Alphabet as CFO and to work with some of the smartest people in the world every day. I think, we have accomplished a lot in the last nine plus years, and I am confident that progress will continue. Of course, I'm not going far and I'm honored to have my new role, which I've been slowly working my way into during the past 11 months and I look forward to continuing to work with Sundar, and our great team. Being CFO of one of the most important companies in the world has been the opportunity and responsibility of a lifetime. Google's Mission of advancing technology and bringing information to people throughout the world is as relevant today as it was when I worked on its IPO. Technology has been a catalyst for economic growth throughout human history. The people on this call know that if a technological advancement is not the focus of every business and government, they will be left behind. Underpinning this is the need for sound and responsible investment. That has never been more important than today and certainly, that is Google and Alphabet's focus. I want to end by thanking Googlers around the world for the innovation and commitment that has enabled us to deliver such extraordinary products and services globally. I also want to thank our investors and analysts for your long-term support and your feedback. Thank you. Sundar, Philipp and I will now take your questions.\nOperator: Thank you. [Operator Instructions] Your first question comes from Brian Nowak with Morgan Stanley. Your line is now open.\nBrian Nowak: Thanks for taking my questions. First, thank you Ruth for all the help and significant impact over the past decade. The first one, it is a little bit of a jump ball, I guess for Sundar, Philipp or Ruth. I guess we're sort of 18 months this fever pitch around the GenAI focus in the world. Maybe from any of your perspective, can you just sort of talk to us about areas where you've seen faster than expected traction or testing adoption of some of the AI, generative AI capabilities versus slower than expected traction and testing from a Google perspective. And then, Ruth I appreciate all the comments about structurally reengineering the OpEx base. Are there any more tangible examples of areas you can talk to us about where you still see further ways to drive more efficiency across the company. Thanks.\nSundar Pichai: Brian, thanks. I'll take the first part. I think it's a good question. Obviously, I think there is a time curve in terms of taking the underlying technology and translating it into meaningful solutions across the Board, both on the consumer and the enterprise side. Definitely, on the consumer side, I'm pleased, as I said in my comments earlier in terms of how for a product like Search, which is used at that scale over many decades. How we've been able to introduce it in a way that it's additive and enhances the overall experience and this positively contributing there. I think across our consumer products, we've been able -- I think we are seeing progress on the organic side. Obviously monetization is something that we would have to earn on top of it. The enterprise side, I think we are at a stage where definitely there are a lot of models. I think roughly, the models are all kind of converging towards a set of base capabilities. But I think where the next wave is, working to build solutions on top of it. And I think there are pockets, be it coding, be it in customer service, et cetera, where we are seeing some of those use cases seeing traction, but I still think there is hard work there to completely unlock those.\nRuth Porat: And on your second question first, thank you for your comments. Look, the reason we've consistently used the term, the phrase that we're focused on durably reengineering our cost base is because these are deep work streams. They are not tactical fixes, and we continue to build on them. And so the main areas that we've talked about are around product and process prioritization around organizational efficiency and structure. Both of those are reflected in the headcount and the fact that headcount is down year-on-year. And across all of those -- as I said, across our entire leadership team, we remain focused on continuing to execute against them. So in terms of the most recent examples, as we talked about last quarter with the combination of the devices and services product area with the platforms and ecosystems product area, we announced that back in April. And what we discussed last quarter and what we're seeing is that unifying teams across these organizations, helps with product execution and what we're really focused on is really adding to velocity and efficiency. So kind of the gift that keeps giving. And then more broadly, all of the work streams that we've talked to you about before, we continue to remain focused on. A big one, very important one, is all of the efficiency efforts, the work streams around technical infrastructure and improving efficiency there. We are also working on the use of AI across Alphabet. We are working on continuing to build on what we've done with our centralized procurement organization. We are continuing to optimize our real estate portfolio. And so again this is across our leadership team. These are efforts that all build to this phrase durably reengineering our cost base.\nBrian Nowak: Great. Thank you both.\nOperator: Our next question comes from Doug Anmuth with JPMorgan. Your line is now open.\nDoug Anmuth: Thanks for taking my questions. One for Ruth and one for Sundar. Ruth you've now had Google Services operating margins roughly 40% for the past two quarters. Just as you create more capacity to help offset the future investments, is it reasonable to think that you could sustain at those kind of levels going forward? And then, Sundar just as it relates to AI overviews, you talked about the positive trends there. Can you just help us understand where you are, how far along in rolling-out AI overviews and then any more color around kind of click-through rates and monetization levels relative to your traditional searches. Thanks.\nRuth Porat: So in terms of the Google services operating margin, it did reflect all the work that we are doing on durably reengineering the cost base. It also reflected the benefit of strong revenue performance in search. And so what I tried to lay out in the comments, as we look forward to the third quarter is operating margins will reflect the increases in depreciation and expenses associated with higher levels of our investment in technical infrastructure. It will also reflect higher expenses associated with the Pixel launch, due to the pull forward. So those are important factors. I would say, overall company-wide, it is important to note that we do expect to continue to deliver full year '24 Alphabet operating margin expansion relative to 2023, but I did want to highlight those important points as we look forward to Q3.\nSundar Pichai: And Doug, thanks. On the AI overview, we are -- we have rolled it out in the US and we are -- will be through the course of the year, definitely scaling it up both to more countries. And also, we have taken a conservative start focused on quality, making sure the metrics are healthy and so on, but you will see us expand the use cases around it, and we'll touch definitely more queries. All the feedbacks we have seen are positive. And on the monetization side, I think Philipp has touched upon it. Maybe Philipp, anything more you want to add there?\nPhilipp Schindler: Yes, look, innovation and improvements to the user experience on search have historically opened up new opportunities for advertisers. We talked about this before we saw this when we navigated from desktop to mobile for example. And we can see GenAI obviously expand the types of questions we can help people with, as Sundar mentioned. And as we said before, people are finding ads either above or below AI overviews helpful. We have a solid baseline here from which we can innovate and as you have probably noticed at GML, we announced that soon we'll actually start testing Search and Shopping ads in AI overviews for users in the US, and they will have the opportunity to actually appear within the overview in a section clearly labeled as sponsored, when they're relevant to both the query and the information in the AI overview, really giving us the ability to innovate here and take this to the next level.\nDoug Anmuth: Thank you. Best of luck, Ruth, in your new role.\nRuth Porat: Thank you.\nOperator: Our next question comes from Michael Nathanson with Moffett. Please go ahead.\nMichael Nathanson: Thanks. I have two, one for Sundar and one for Philipp. Sundar, on decision this week to not deprecate cookies. I know it's been a long journey. Can you talk a bit about what we should expect in terms of new experience in Chrome and why the company makes a decision not to go down the path on deprecating cookies. And then Philipp, I know it's only one quarter, but it's interesting that Search is growing faster than YouTube, which surprised some of us. But can you talk about what factors you think are kind of differences in growth rates between these markets? And is there anything on the AI front that you could see maybe reaccelerating YouTube growth, as you've seen happen with Search. Thanks so much.\nSundar Pichai: And Michael on cookies, Look I think, obviously we are super committed to improving privacy for users in chrome and there was the whole focus around privacy sandbox and we remain committed on the journey, but on third-party cookies, given the implications across the ecosystems and considerations and feedback across so many stakeholders. We now believe user choice is the best path forward there and we'll both improve privacy by giving users choice and we'll continue our investments in privacy enhancing technologies, but it is obviously an area we will be taking feedback from the players in the ecosystem and we are committed to being privacy first as well.\nPhilipp Schindler: And on the second part of your question, maybe Ruth, you want to jump in first and then I take the rest if needed.\nRuth Porat: Absolutely. So Look, as we both noted, search revenues really reflected broad based growth across verticals. That was led by retail followed by financial services. I think your question really goes to the heart of the year-on-year growth comparison. And as both Philipp and I noted, we are really pleased with YouTube, the YouTube team all that was done, it was driven by brand followed by direct response, and they have very strong ongoing operating metrics, which Philipp will comment on. I think the important point to note, and I tried to tease out in opening comments, was that the deceleration in this year-on-year revenue growth for the second quarter versus the first quarter, primarily reflected the tougher comparison versus the first quarter because at that point, as you probably recall, YouTube was lapping negative year-on-year growth in Q1 last year. And then also Q1 benefited from the extra from leap year. And so what you are also seeing here is with YouTube, we were [anniversaring] (ph) the ramp in APAC based retailers that began in the second quarter last year and foreign exchange headwinds as well that we noted. And so it's -- there are some timing issues going on. And what we are trying to highlight is the underlying operating strength. Back to you, Philipp.\nPhilipp Schindler: Yes, that was very comprehensive. Nothing really to add from my side here.\nSundar Pichai: The only thing I would say, adding to Brian's first question on areas where things are maybe taking longer. I think, look we are all building multimodal models. At least Gemini has been natively multimodal from the ground up. But most of the use cases today that have been unlocked have been around the tech side. So in terms of getting real generative audio, video experience is working well. I think there is still – it is going to take some time. But over time, obviously it will be deeply relevant to YouTube and so it's an area I'm excited about in the future.\nMichael Nathanson: Okay. Thanks a lot. And best to you. Thanks.\nOperator: Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open.\nEric Sheridan: Thanks so much. And I'll echo the thanks for Ruth, for all the insights and partnership over the years on these earnings calls. Sundar maybe first for you, in terms of Cloud and bringing AI to the enterprise, I wanted to know if you go a little bit deeper in terms of how you are seeing AI actually get adopted implemented, what it potentially could mean for the strategic positioning of the cloud business and the potential for AI workloads to be a stimulant to revenue growth for Cloud first. And then following up the last set of questions on YouTube are really about the macro or the ad environment. What do you guys, as a team, continue to learn about the subscription side of YouTube and the appetite for consumers to engage with a broader array of media products at the subscription layer. Thanks.\nSundar Pichai: Thanks Eric. Look, on the Cloud and AI stuff, obviously, it is something which I think will end up being a big driver over time. I mentioned in my opening remarks, already if you take a look at our AI infrastructure and generative AI solutions for cloud across everything we do, be it compute on the AI side, the products we have through Vertex AI, Gemini for Workspace and Gemini for Google Cloud, et cetera, we definitely are seeing traction. People are deeply engaging with Gemini models across Vertex and AI studio. We now have over 2 million developers playing around with these things, and you are definitely seeing early use cases. But I think we are in this phase, where we have to deeply work and make sure on these use cases, on these workflows. We are driving deeper progress on unlocking value, which I'm very bullish will happen, but these things take time. So -- but if I were to take a longer-term outlook, I definitely see a big opportunity here. And I think particularly for us, given the extent to which we are investing in AI, our research infrastructure leadership, all of that translates directly. And so I'm pretty excited about the opportunity space ahead.\nRuth Porat: And then on your second question with respect to subscriptions, I am implicit in your question, how strong is it, as I noted in opening comments, that overall line subscriptions platforms and devices delivered healthy growth and that was led by subscriptions. And as we've said on many calls here in a row, the subscription revenue growth continued to be quite strong. It was driven by subscriber growth in both YouTube TV and YouTube Music premium. And then the other component within that line is Google One that also delivered strong subscriber and revenue growth. I think the heart of your question is really around YouTube and that is the heart of the revenues in that line. So it continues to be very strong. We see a lot of take up in it, strong subscriber growth, really pleased with it. We did note that growth on that line decelerated due to anniversarying the YouTube TV price increase. But at the heart of it, our people interested in the subscription offerings and it’s the take of significant. We're really pleased with it.\nEric Sheridan: Thank you.\nOperator: Our next question comes from Ross Sandler with Barclays. Your line is now open.\nRoss Sandler: Hi, everybody. Just two questions on the AI CapEx. So it looks like from the outside at least, the hyperscaler industry is going from kind of an under bill situation this time last year to better meeting the demand with capacity right now to potentially being overbuilt next year if these CapEx growth rates keep up. So do you think that's a fair characterization? And how are we thinking about the return on invested capital with this AI CapEx cycle. And then related to that, do you think that the AI industry is close to or far away from hitting some kind of wall on foundation model improvement in AI training, based on like lack of availability of new data to train on. Just your thoughts on that would be great. Thank you.\nSundar Pichai: Thanks Ross. I think great questions. Look, I -- obviously, we are at an early stage of what I view as a very transformative area and in technology when you are going through these transitions, aggressively investing upfront in a defining category, particularly in an area in which in a leveraged way cuts across all our core areas our products, including Search, YouTube and other services, as well as fuels growth in Cloud and supports the innovative long-term Bets and Other Bets is definitely something for us makes sense to lean in. I think the one way I think about it is when we go through a curve like this, the risk of under-investing is dramatically greater than the risk of over-investing for us here, even in scenarios where if it turns out that we are over investing. We clearly -- these are infrastructure, which are widely useful for us. They have long useful lives and we can apply it across, and we can work through that. But I think not investing to be at the frontier, I think definitely has much more significant downside. Having said that, we obsess around every dollar we put in. Our teams are -- work super hard, I'm proud of the efficiency work, be it optimization of hardware, software, model deployment across our fleet. All of that is something we spend a lot of time on, and that's how we think about it. To your second question on whether -- how do the scaling loss hold. Are we hitting on some kind of wall or something? Look, I think we are all pushing very hard, and there is going to be a few efforts, which will scale up on the compute side and push the boundaries of these models. What I would tell is regardless of how that plays out, you still think there is enough optimizations we are all doing, which is driving constant progress in terms of the capabilities of the models. And more importantly, taking them and translating into real use cases across the consumer and enterprise side, I think on that frontier. I think there is still a lot of progress to be had. And so we are pretty focused on that as well.\nRoss Sandler: Thank you.\nOperator: Our next question comes from Stephen Ju with UBS. Your line is now open.\nStephen Ju: Okay. Thank you so much. So Sundar, I guess to ask the AI question a different way. As we talk to some of the model builders out there, it looks like the initial use cases are more on the cost savings or efficiency side. But when do we -- when do you think we'll start thinking about products that can help revenue generation for the Fortune 500, Fortune 1000 companies, which is probably something that can hopefully create greater value over time versus just cutting costs? And Philipp, listening to what will be, I guess Ruth's final comments on Q2 on these public calls. And thank you, by the way Ruth, for all the help. I couldn't help but notice that the bigger factors were brand followed by direct response. And if we continue to think that the one you bring up first is the larger factor and tying this into your prior commentary about shopping being an important consideration. When do you think we'll start talking about direct response being a much bigger contributor to YouTube's growth versus brand? Thank you.\nSundar Pichai: On the first part of the question look I think the technology's horizontal enough, it can apply on both sides. If you take a use case like improving the customer service experience, it is part of it which is driving efficiencies, and you can look at it from a cost standpoint, but you could also be overall improving the experience, improving conversion, driving the funnel better. And so increasing basket size if you are a retail e-commerce player, et cetera. So we are seeing people experiment across both sides. And so I think, you will see it played across both sides. Philipp, on the second one?\nPhilipp Schindler: Yes. On the second one, look on the direct response side, as you know it is about driving and converting commercial intent and customers are obviously benefiting from including video in their AI-powered campaigns, it could be PMax, it could be DemandGen and obviously using our automated tools to enhance and create video creatives. And we are very, very optimistic about this path. On average advertisers who run both image and video ads with DemandGen campaigns see 6% more conversions per dollar than those running image only ads and discovery. And this is just one little example of how this can obviously boost your performance business. So that's a big part. The brand side, as you know Google AI continues to make it easier for brands to show up next to the content where viewers are obviously the most engaged. And they're finding it, as you can see from the numbers, a very effective way to drive awareness and consideration. And we are also quite excited about some of the recent launches on YouTube shopping side, if you want to put that into the direct response bucket.\nStephen Ju: Okay. Thank you.\nOperator: And our last question comes from Justin Post with Bank of America. Your line is now open.\nJustin Post: Great. I'll ask a couple of areas. First on the cloud acceleration, would you characterize that as new AI demand helping drive that year-to-date? Or is that more of a rebound in just general compute and other demand or is AI really moving this forward and helping drive acceleration. And then I wanted to ask about your internal cost savings which has been really strong. How are you using AI internally to help cut costs? Are you seeing better efficiencies with your engineers? And just would love to hear about how you are applying AI to cut your own costs? Thank you.\nRuth Porat: Great. Thank you for that. So overall we are -- as both Sundar and I said, we are very pleased with the results in Cloud. And there is clearly a benefit as the Cloud team is engaging broadly with customers around the globe with AI related solutions, AI infrastructure solutions and the generative-AI solutions. I think we noted that we're particularly encouraged that the majority of our top 100 customers are already using our generative AI solution. So it is clearly adding to strength of the business on top of all that they are doing. And just to be really clear, the results for GCP, the growth rate for GCP is above the growth for cloud overall. And then I'll turn it to Sundar on the cost saving point, but just one point we are really pleased as well that Cloud's margin improved as it did. And in part, that reflects the revenue strength that they delivered and all of the efficiency efforts that I've already spoken about. But looking ahead in Q3, we do expect the same seasonal pattern that you saw last year with respect to margin and we are continuing to invest in the business.\nSundar Pichai: Look, I think specifically, if the question is about engineers and coding, et cetera, we definitely want to be on the cutting edge there. I think, we are making these tools available to some of the most [line of] (ph) productive engineers and demanding engineers out there, and they are definitely kicking the tires hard. And -- but I would say, it's still all in very early stages. I think particularly when it comes to writing high-quality secure code, but I think all the learnings what we are gaining here will translate into our models and products, and that's the virtuous cycle, which I'm excited by. So there's a lot more to come.\nJustin Post: Great, thank you.\nOperator: Thank you. And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks.\nJim Friedland: Thanks everyone for joining us today. We look forward to speaking with you again on our third quarter 2024 call. Thank you and have a good evening.\nOperator: Thank you everyone. This concludes today's conference call. Thank you for participating. You may now disconnect.",
'published': '2024-07-23',
'title': 'GOOG 2024Q2',
'author': 'GOOG'},
{'ticker': 'GOOG',
'quarter': '2024Q1',
'pub_quarter': '2024Q2',
'year': 2024,
'full_content': "Operator: Welcome, everyone. Thank you for standing by for the Alphabet First Quarter 2024 Earnings Conference Call. [Operator Instructions] \n I would now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead. \nJames Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's First Quarter 2024 Earnings Conference Call. With us today are Sundar Pichai, Philipp Schindler, and Ruth Porat. \n Now I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. \n During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. \n And now I'll turn the call over to Sundar. \nSundar Pichai: Thank you, Jim, and hello, everyone. It was a great quarter led by strong performance from Search, YouTube, and Cloud. \n Today, I want to share how we are thinking about the business and the opportunity more broadly. Of course, that's heavily focused on AI and Search. Then I'll take you through some highlights from the quarter in Cloud, YouTube and beyond. \n Let's discuss our momentum and strategy. Taking a step back, it took Google more than 15 years to reach $100 billion in annual revenue. In just the last 6 years, we have gone from $100 billion to more than $300 billion in annual revenue. Of course, Search continues to power that as you see in our Q1 results. But in addition, we expect YouTube overall and Cloud to exit 2024 at a combined annual run rate of over $100 billion. This shows our track record of investing in and building successful new growing businesses. \n Now let's look at how well we are positioned for the next wave of AI innovation and the opportunity ahead. There are 6 points to make: one, research leadership; two, infrastructure leadership; three, innovation in Search; four, our global product footprint; five, velocity in execution; six, monetization paths. \n First, our foundation of research leadership. We've been an AI-first company since 2016, pioneering many of the modern breakthroughs that power AI progress for us and for the industry. Last week, we further consolidated teams that build AI models under Google DeepMind. This will help simplify development and establish a single access point for our product teams as they build generative AI applications with these models. The teams are making rapid progress, developing Gemini and other models. \n In February, we rolled out Gemini 1.5 Pro, which shows dramatic performance enhancements across a number of dimensions. It includes a breakthrough in long context understanding, achieving the longest context window of any large-scale foundation model yet. Combining this with Gemini's native multimodal understanding across audio, video, text code and more, it's highly capable. We are already seeing developers and enterprise customers enthusiastically embrace Gemini 1.5 and use it for a wide range of things. Beyond Gemini, we have built other useful models, including our Gemma open models as well as image and visual models and others. \n Second, infrastructure leadership. We have the best infrastructure for the AI era. Building world-leading infrastructure is in our DNA, starting in our earliest days when we had to design purpose-built hardware to power Search. Our data centers are some of the most high-performing, secure, reliable, and efficient in the world. They've been purpose-built for training cutting-edge AI models and designed to achieve unprecedented improvements in efficiency. We have developed new AI models and algorithms that are more than 100x more efficient than they were 18 months ago. \n Our custom TPUs, now in their fifth generation, are powering the next generation of ambitious AI projects. Gemini was trained on and is served using TPUs. We are committed to making the investments required to keep us at the leading edge in technical infrastructure. You can see that from the increases in our capital expenditures. This will fuel growth in Cloud, help us push the frontiers of AI models and enable innovation across our services, especially in Search. \n AI innovations in Search are the third and perhaps the most important point I want to make. We have been through technology shifts before, to the web, to mobile, and even to voice technology. Each shift expanded what people can do with Search and led to new growth. We are seeing a similar shift happening now with generative AI. For nearly a year, we've been experimenting with SGE in search labs across a wide range of queries. And now we are starting to bring AI overviews to the main Search results page. We are being measured in how we do this, focusing on areas where gen AI can improve the search experience while also prioritizing traffic to websites and merchants. \n We have already served billions of queries with our generative AI features. It's enabling people to access new information, to ask questions in new ways and to ask more complex questions. Most notably, based on our testing, we are encouraged that we are seeing an increase in search usage among people who use the new AI overviews as well as increased user satisfaction with the results. And with Circle to Search, people can now circle what they see on their Android screens, ask a question about an image or object in a video and get an AI overview with Lens. \n Fourth, our global product footprint beyond Search. We have 6 products with more than 2 billion monthly users, including 3 billion Android devices. 15 products have 0.5 billion users, and we operate across 100-plus countries. This gives us a lot of opportunities to bring helpful gen AI features and multimodal capabilities to people everywhere and improve their experiences. We have brought many new AI features to Pixel, Photos, Chrome, Messages and more. We are also pleased with the progress we are seeing with Gemini and Gemini Advanced through the Gemini app on Android and the Google app on iOS. \n Fifth, improved velocity in execution. We've been really focused on simplifying our structures to help us move faster. In addition to bringing together our model-building teams under Google DeepMind, we recently unified our ML infrastructure and ML developer teams to enable faster decisions, smarter compute allocation, and a better customer experience. \n Earlier this year, we brought our Search teams together under one leader. And last week, we took another step, bringing together our platforms and devices teams. The new combined team will focus on delivering high-quality products and experiences, bolstering the Android and Chrome ecosystems, and bringing our best innovations to partners faster. \n We also remain focused on long-term efforts to durably reengineer our cost base. You can see the impact of this work reflected in our operating margin improvement. We continue to manage our head count growth and align teams with our highest priority areas. This speeds up decision-making, reduces layers, and enables us to invest in the right areas. \n Beyond our teams, we are very focused on our cost structures, procurement and efficiency. And a number of technical breakthroughs are enhancing machine speed and efficiency, including the new family of Gemini models and a new generation of TPUs. For example, since introducing SGE about a year ago, machine costs associated with SGE responses have decreased 80% from when first introduced in Labs driven by hardware, engineering, and technical breakthroughs. We remain committed to all of this work. \n Finally, our monetization path. We have clear paths to AI monetization through Ads and Cloud as well as subscriptions. Philipp will talk more about new AI features that are helping advertisers, including bringing Gemini models into Performance Max. Our Cloud business continues to grow as we bring the best of Google AI to enterprise customers and organizations around the world. And Google One now has crossed 100 million paid subscribers, and in Q1, we introduced a new AI premium plan with Gemini Advanced. \n Okay, those are the 6 points so now let me turn to quarterly highlights from Cloud and YouTube in a bit more detail. In Cloud, we have announced more than 1,000 new products and features over the past 8 months. At Google Cloud Next, more than 300 customers and partners spoke about their generative AI successes with Google Cloud, including global brands like Bayer, Cintas, Mercedes-Benz, Walmart and many more. \n Our differentiation in Cloud begins with our AI hypercomputer, which provides efficient and cost-effective infrastructure to train and serve models. Today, more than 60% of funded gen AI start-ups and nearly 90% of gen AI unicorns are Google Cloud customers. And customers like PayPal and Kakao Brain are choosing our infrastructure. We offer an industry-leading portfolio of NVIDIA GPUs along with our TPUs. This includes TPU v5p, which is now generally available and NVIDIA's latest generation of Blackwell GPUs. We also announced Axion, our new Google design and Arm-based CPU. In benchmark testing, it has performed up to 50% better than comparable x86-based systems. \n On top of our infrastructure, we offer more than 130 models, including our own models, open source models and third-party models. We made Gemini 1.5 Pro available to customers as well as Imagine 2.0 at Cloud Next. And we shared that more than 1 million developers are now using our generative AI across tools, including AI Studio and Vertex AI. We spoke about how customers like Bristol-Myers Squibb and Etsy can quickly and easily build agents and connect them to their existing systems. For example, Discover Financial has begun deploying gen AI-driven tools to its nearly 10,000 call center agents to achieve faster resolution times for customers. Customers can also now ground their gen AI with Google Search and their own data from their enterprise databases and applications. \n In Workspace, we announced that organizations like Uber, Pepperdine University and PennyMac are using Gemini and Google Workspace, our AI-powered agent that's built right into Gmail, Docs sheets and more. We also announced Google Vids, a new application to create stories in short video format. And we introduced Gemini for Meetings and Messaging and Gemini Security for Workspace. \n Customers are choosing Workspace because they have deep trust in our powerful security and privacy features. \n Our Cloud business is now widely seen as the leader in cybersecurity. I saw this firsthand when I went to the Munich Security Conference in February. Cybersecurity analysts are using Gemini to help spot threats, summarize intelligence and take action against attacks, helping companies like American Family Insurance aggregate and analyze security data in seconds instead of days. \n Turning next to YouTube, which continues to grow and lead in streaming. We announced that on average, viewers are watching over 1 billion hours of YouTube content on TVs daily. AI experiments like Dream Screen will give anyone the ability to make AI-generated backgrounds for YouTube Shorts. And on subscriptions, which are increasingly important for YouTube, we announced that in Q1, YouTube surpassed 100 million Music and Premium subscribers globally, including trialers. And YouTube TV now has more than 8 million paid subscribers. \n Finally, in Other Bets, Waymo's fully autonomous service continues to grow ridership in San Francisco and Phoenix with high customer satisfaction, and we started offering paid rides in Los Angeles and testing rider-only trips in Austin. \n Overall, it was a great quarter, and there's more to come. IO is in less than 3 weeks, followed by Brandcast and Google Marketing Live. \n I want to thank our employees around the world who are at the heart of this progress and who continue to focus on building innovative products, helpful services and new opportunities for businesses and partners around the world. Thank you. Philipp? \nPhilipp Schindler: Thanks, Sundar, and hi, everyone. \n Google Services revenue of $70 billion were up 14% year-on-year. Search and other revenues grew 14% year-on-year led again by solid growth in the retail vertical with particular strength from APAC-based retailers, which began in the second quarter of 2023. \n YouTube Ads revenues were up 21% year-on-year driven by growth in both direct response and brand. Network revenues declined 1% year-on-year. In subscriptions, platforms and devices, year-on-year revenues increased 18%, driven again by strong growth in YouTube subscriptions. \n Let's now talk about a few highlights from the quarter from a product innovation and advertising performance perspective. \n First, it bears repeating that AI innovation across our Ads ecosystem is core to every aspect of our product portfolio, from targeting, bidding, creative, measurement, and across campaign types. We've talked about whole solutions like Smart Bidding use AI to predict future ad conversions and their value in helping businesses stay agile and responsive to rapid shifts in demand and how products like broad match leverage LLMs to match ads to relevant searches and help advertisers respond to what millions of people are searching for. This is foundational. \n As advances accelerate in our underlying AI models, our ability to help businesses find users at speed and scale and drive ROI just keeps getting better. We're especially excited about the doors gen AI is opening for creative capabilities, helping deliver on the premise of getting the right ad to the right user in the right moment. \n Look at Performance Max. In February, we rolled Gemini into PMax. It's helping curate and generate text and image assets so businesses can meet PMax asset requirements instantly. This is available to all U.S. advertisers and starting to roll out internationally in English, and early results are encouraging. Advertisers using PMax asset generation are 63% more likely to publish a campaign with good or excellent ad strength. And those who improve their PMX ad strength to excellent see 6% more conversions on average. \n We're also driving improved results for businesses opting into automatically created assets, which are supercharged with gen AI. Those adopting ACA see, on average, 5% more conversions at a similar cost per conversion in Search and Performance Max campaigns. \n And then there's Dimension. Advertisers are loving its ability to engage new and existing customers and drive purchase consideration across our most immersive and visual touch points like YouTube, Shorts, Gmail and Discover. \n Hollywood film and TV studio, Lionsgate, partnered with Horizon Media to test what campaign type will deliver the most ticketing page views for its The Hunger Games: Ballad of Songbirds and Snakes film. Over a 3-week test, demand gen was significantly more efficient versus social benchmarks with an 85% more efficient CPC and 96% more efficient cost per page view. Lionsgate has since rolled out demand gen for 2 new titles. \n We're also bringing new creative features to demand gen. Earlier this month, we announced new generative image tools to help advertisers create high-quality assets in a few steps with a few simple prompts. This will be a win for up-leveling visual storytelling and testing creative concepts more efficiently. \n And then there's obviously Search generative experience, which Sundar talked about. I laid out that innovation and the user experience on Search has historically opened up new opportunities for advertisers. We saw this when we successfully navigated from desktop to mobile. We're continuing to experiment with new ad formats, including search and shopping ads alongside search results in SGE. And we shared in March how folks are finding ads either above or below the SGE results helpful. We're excited to have a solid baseline to keep innovating on and confident in the role SGE, including Ads, will play in delighting users and expanding opportunities to meet user needs. \n Which brings me to Search and our strong performance in the first quarter. In Q1, retail was again the top contributor. Our focus remains on driving profitability and growth for retailers, helping them optimize digital performance for both online and off-line as well as innovate across our shopping and merchant experiences. \n Highlights include continued upsides for retailers, leading into agile budget and bidding strategies across Search, PMax, or both; take-home goods retailer IKEA, who leaned into Google's store sales measurement to understand its total omnichannel revenue opportunity across search. By measuring 2.3x more revenue and using value-based bidding solutions to bid to its omnichannel customers, IKEA drove a significant increase in omni revenue in Q1 and is now scaling this strategy globally. We also expanded local inventory ads into 23 countries, helping drive shopper confidence and off-line sales. Retailers can convert intent into action by showcasing in-store availability, pricing, pickup options and more all in one ad format. \n Moving to YouTube. Last quarter, I went deep into our strategy. It all starts with creation, which drives viewership, which leads to monetization. A few updates to build on Sundar's remarks. \n First, creation, which is all about giving creators the tools to create amazing content, grow their audiences and build their businesses. In 2023, more people created content on YouTube than ever before, and the number of channels uploading Shorts year-on-year grew 50%. We also hit a new milestone with 3 million-plus channels in our YouTube Partner Program. We recently shared that YPP has paid out more than any other creator monetization platform, including over $70 billion to creators, artists, and media companies over the last 3 years. \n From a viewer's perspective, watch time across YouTube continues to grow, with strength in both Shorts and CTV. According to Nielsen, YouTube has been the leader in U.S. streaming watch time for the last 12-plus months. In the first quarter, Livingroom. benefited from a combination of strong watch time growth, innovation in the user and advertiser experience, and a shift in brand advertising budgets from linear TV to YouTube. Viewers are watching YouTube because they expect to access everything in one place across screens and formats, their favorite creators, live sports, breaking use, educational content, movies, music and more. And advertisers continue to lean in to find audiences they can't find elsewhere. \n Which brings me to monetization. We're pleased with our Q1 performance across both our ad-supported and subscription offerings. Sundar covered subscription growth. On the Ads front, direct and brand were both strong this quarter. Shorts monetization continued to improve, with Shorts ads now supported on mobile, tablet, Livingroom. and desktop, and available to both performance and brand advertisers. \n In the U.S., the monetization rate of Shorts relative to in-stream viewing has more than doubled in the past 12 months, including a 10-point sequential improvement in the first quarter alone. Just last week, we introduced new ways for brands to get the most out of their Shorts ads with new lineups on YouTube Select, including sports, beauty, fashion and lifestyle, and entertainment. For YouTube advertisers, increasing brand lift is one of the core goals. In Q1, we saw strong traction from the introduction of a pause ads pilot on connected TVs, a new non-interruptive ad format that appears when users pause their organic content. Initial results show that pause ads are driving strong brand lift results and are commanding premium pricing from advertisers. \n Before I wrap, two quick highlights on how we're helping our partners transform and accelerate impact with the best across Google. \n Number one, to help McDonald's build the restaurant of the future, we're deepening our partnership across cloud and ads. Part of this includes them connecting Google Cloud's latest hardware and data technologies across restaurants globally and starting to apply Gen AI to enhance its customer and employee experiences. \n Number two, WPP. At Google Cloud Next, we announced a new collaboration that will redefine marketing through the integration of our Gemini models with WPP Open, WPP's AI-powered marketing operating system, already used by more than 35,000 of its people and adopted by key clients, including The Coca-Cola Company, L'Oreal and Nestle. We're just getting started here and excited about the innovation this partnership will unlock. \n With that, a huge thank you to our customers and partners, many of whom we're excited to see at Google Marketing Live and Brandcast in just a few weeks. And a huge thank you, as always, to our incredible teams for their agility and hard work this quarter. \n Ruth, you're up. \nRuth Porat: Thank you, Philipp. We are very pleased with our financial results for the first quarter driven, in particular, by strength in Search and Cloud as well as the ongoing efforts to durably reengineer our cost base. My comments will be on year-over-year comparisons for the first quarter unless I state otherwise. I will start with results at the Alphabet level, followed by segment results and conclude with our outlook. \n For the first quarter, our consolidated revenues were $80.5 billion, up 15% or up 16% in constant currency. Search remained the largest contributor to revenue growth. \n In terms of total expenses, the year-on-year comparisons reflect the impact of the restructuring charges we took in the first quarter of 2023 of $2.6 billion as well as the $716 million in employee severance and related charges in the first quarter of 2024. As you can see in our earnings release, these charges were allocated across the expense lines in other cost of revenues and OpEx based on associated head count. \n To help with year-on-year comparisons, we included a table in our earnings release to adjust other cost of revenues, operating expenses, operating income, and operating margin to exclude the impact of severance and related office space charges in the first quarter of 2023 versus 2024. \n In terms of expenses, total cost of revenues was $33.7 billion, up 10%. Other cost of revenues was $20.8 billion, up 10% on a reported basis, with the increase driven primarily by content acquisition costs associated with YouTube given the very strong revenue growth in both subscription offerings and ad-supported content. On an adjusted basis, other cost of revenues were up 13% year-on-year. \n Operating expenses were $21.4 billion, down 2% on a reported basis, primarily reflecting expense decreases in sales and marketing and G&A, offset by an increase in R&D. The largest single factor in the year-on-year decline in G&A expenses was lower charges related to legal matters. \n On an adjusted basis, operating expenses were up 5%, reflecting, first, in R&D, an increase in compensation expense, primarily for Google DeepMind and Cloud; and second, in sales and marketing, a slight increase year-on-year, reflecting increases in compensation expense primarily for Cloud sales. \n Operating income was $25.5 billion, up 46% on a reported basis, and our operating margin was 32%. On an adjusted basis, operating income was up 31%, and our operating margin was 33%. Net income was $23.7 billion and EPS was $1.89. We delivered free cash flow of $16.8 billion in the first quarter and $69.1 billion for the trailing 12 months. We ended the quarter with $108 billion in cash and marketable securities. \n Turning to segment results. Within Google Services, revenues were $70.4 billion, up 14%. Google Search and other advertising revenues of $46.2 billion in the quarter were up 14% led again by growth in retail. YouTube advertising revenues of $8.1 billion were up 21% driven by both direct response and brand advertising. Network advertising revenues of $7.4 billion were down 1%. Subscriptions, platforms and devices revenues were $8.7 billion, up 18%, primarily reflecting growth in YouTube subscription revenues. \n TAC was $12.9 billion, up 10%. Google Services operating income was $27.9 billion, up 28%. And the operating margin was 40%. \n Turning to the Google Cloud segment. Revenues were $9.6 billion for the quarter, up 28%, reflecting significant growth in GCP with an increasing contribution from AI and strong Google Workspace growth, primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $900 million and an operating margin of 9%. \n As to our Other Bets, for the first quarter, revenues were $495 million, benefiting from a milestone payment in one of the Other Bets. The operating loss was $1 billion. \n Turning to our outlook for the business. With respect to Google Services, first, within Advertising, we are very pleased with the momentum of our Ads businesses. Search had broad-based strength across verticals. In YouTube, we had acceleration in revenue growth driven by brand and direct response. \n Looking ahead, two points to call out: first, results in our advertising business in Q1 continued to reflect strength in spend from APAC-based retailers, a trend that began in the second quarter of 2023 and continued through Q1, which means we will begin lapping that impact in the second quarter; second, the YouTube acceleration in revenue growth in Q1 reflects, in part, lapping the negative year-on-year growth we experienced in the first quarter of 2023. \n Turning to subscriptions, platforms, and devices. We continue to deliver significant growth in our subscriptions business, which drives the majority of revenue growth in this line. The sequential quarterly decline in year-on-year revenue growth for the line in Q1 versus Q4 reflects, in part, the fact that we had only 1 week of Sunday Ticket subscription revenue in Q1 versus 14 weeks in Q4. Looking forward, we will anniversary last year's price increase in YouTube TV starting in May. \n With regard to platforms, we are pleased with the performance in Play driven by an increase in buyers. \n With respect to Google Cloud, performance in Q1 reflects strong demand for our GCP infrastructure and solutions as well as the contribution from our Workspace productivity tools. The growth we are seeing across Cloud is underpinned by the benefit AI provides for our customers. We continue to invest aggressively while remaining focused on profitable growth. \n As we look ahead, two points that will affect sequential year-on-year revenue growth comparisons across Alphabet: first, Q1 results reflect the benefit of leap year, which contributed slightly more than 1 point to our revenue growth rate at the consolidated level in the first quarter; second, at current spot rates, we expect a larger headwind from foreign exchange in Q2 versus Q1. \n Turning to margins. Our efforts to durably reengineer our cost base are reflected in a 400 basis point expansion of our Alphabet operating margin year-on-year, excluding the impact of restructuring and severance charges in both periods. You can also see the impact in the quarter-on-quarter decline in head count in Q1, which reflects both actions we have taken over the past few months and a much slower pace of hiring. As we have discussed previously, we are continuing to invest in top engineering and technical talent, particularly in Cloud, Google DeepMind and technical infrastructure. \n Looking ahead, we remain focused on our efforts to moderate the pace of expense growth in order to create capacity for the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure. We believe these efforts will enable us to deliver full year 2024 Alphabet operating margin expansion relative to 2023. \n With respect to CapEx, our reported CapEx in the first quarter was $12 billion, once again driven overwhelmingly by investment in our technical infrastructure, with the largest component for servers followed by data centers. The significant year-on-year growth in CapEx in recent quarters reflects our confidence in the opportunities offered by AI across our business. Looking ahead, we expect quarterly CapEx throughout the year to be roughly at or above the Q1 level, keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. With regard to Other Bets, we similarly have work streams underway to enhance overall returns. \n Finally, as I trust you saw in the press release, we are very pleased to be adding a quarterly dividend of $0.20 per share to our capital return program as well as a new $70 billion authorization in share repurchases. The core of our capital allocation framework remains the same, beginning with investing aggressively in our business as you have heard us talk about today. Given the extraordinary opportunities ahead, we view the introduction of the dividend as further strengthening our overall capital return program. \n Thank you. Sundar, Philipp, and I will now take your questions. \nOperator: [Operator Instructions] Our first question comes from Brian Nowak with Morgan Stanley. \nBrian Nowak: I have two. The first one, I wanted to ask about overall search behavior. Philipp, I know you talked in the past about how overall query trends continue to grow. Can I ask you to drill a little bit more into monetizable and commercial query trends? Has there been any changes in sort of your commercial query trends growth. There's just been all these new entrants moving around in e-commerce. That is my first one.\n Then the second one for Ruth, when you talked about sort of more efforts to moderate expense growth from here, can you just sort of give us some examples of areas where you still see the potential for more optimization or work streams in place to continue to durably reengineer the OpEx base as we go throughout 2024. \nSundar Pichai: Thanks, Brian. To your first question, look, I think broadly, we've always found that over many years, when things work well on the organic side, monetization follows. So typically, the trends we see carry over well. Overall, I think with generative AI in Search, with our AI overviews, I think we will expand the type of queries we can serve our users. We can answer more complex questions as well as, in general, that all seems to carry over across query categories. Obviously, it's still early, and we are going to be measured and put user experience at the front, but we are positive about what this transition means. \nRuth Porat: And on the second question in terms of the various work streams, as both Sundar and I said, we remain very focused on ongoing efforts to slow the pace of expense growth, what we've been calling durably reengineering our cost base. And I made this point in opening comments, but we are very cognizant of the increasing headwind we have from higher depreciation and expenses associated with the higher CapEx, and so these efforts are ongoing. And they're very much the same that we've talked with you about previously. It starts with product and process prioritization, all of the work around organizational efficiency and structure. These are ongoing. \n And so as an example, the work that Sundar talked about, combining devices and services with our platforms and ecosystems, product area is a really good example because unifying the teams not only helps us deliver higher-quality products and experiences, but we think it enables us to move with greater velocity and efficiency.\n And then the other work streams we've talked to you about in the past, like all of the work around technical infrastructure, which Sundar alluded to; streamlining operations within the company through the use of AI; what we're doing with procurement with our suppliers and vendors, which he also referenced; the work you've seen on real estate optimization, these are all ongoing work streams, which is why we have them under the umbrella, durably reengineering our cost base, and they are ongoing. \nOperator: Our next question comes from Doug Anmuth with JPMorgan. \nDouglas Anmuth: Sundar, you talked about bringing more generative AI features into the main Search page. Can you just talk about what kind of queries or scenarios do you think that that's working best for so far? And just how we should think about the cadence of continuing to adopt more of those features within core search. \n And then Ruth, on CapEx spending, the $12 billion in 1Q, can we assume that run rating that and above is reasonable for this year? And I know it's very early, but should we generally expect higher CapEx next year as well? \nSundar Pichai: Thanks, Doug. On SGE in Search, we are seeing early confirmation of our thesis that this will expand the universe of queries where we are able to really provide people with a mix of actual answers linked to sources across the Web and bring a variety of perspectives, all in an innovative way. And we've been rolling out AI overviews in the U.S. and the U.K., trying to mainly tackle queries which are more complex, where we think SGE will clearly improve the experience. We've already served billions of queries and it seems to cut across categories, but we are still continuing our testing. And we are metrics-driven in these areas. But I am optimistic that it clearly improves the user experience. Users are telling us that. And we are seeing it in our metrics, and we'll continue evolving it through the course of this year. \nRuth Porat: And then in terms of CapEx, as I said in opening comments, we do expect the quarterly CapEx throughout the year to be roughly at or above the $12 billion cash CapEx we had here in Q1. As I said, you can always have variability in the reported quarterly CapEx just due to the timing of cash payments, but roughly at or above this level. And it really goes to Sundar's opening comment that we're very committed to making the investments required to keep us at the leading edge in technical infrastructure to support the growth in Cloud, all the innovation in Search that he and Philipp has spoken about and our lead with Gemini.\n I will note that nearly all of the CapEx was in our technical infrastructure. We expect that our investment in office facilities will be about less than 10% of the total CapEx in 2024, roughly flat with our CapEx in 2023, but is still there. And then with respect to 2025, as you said, it's premature to comment so nothing to add on that. \nOperator: Our next question comes from Eric Sheridan with Goldman Sachs. \nEric Sheridan: Maybe just one question of a big picture nature for Sundar. Sundar, if we come back to your earlier comments at the beginning of the call and framing up longer-term initiatives and longer-term narratives, I wanted to know if you could talk a little bit about both the opportunities and the challenges of operating at scale in a time like this where there's a lot of technology innovation going on and how you see the elements of trying to strike a balance towards moving the organization forward while still continuing to both invest for growth as well as balance margins. \nSundar Pichai: Thanks, Eric. Great question. Obviously, I think the AI transition, I think it's a once-in-a-generation kind of an opportunity. We've definitely been gearing up for this for a long time. You can imagine we started building TPUs in 2016, so we've definitely been gearing up for a long time. The real opportunities we see is the scale of research and innovation, which we have built up and are going to continue to deliver. I think for the first time, we can work on AI in a horizontal way and it impacts the entire breadth of the company, be it Search, be it YouTube, be it Cloud, be it Waymo and so on. And we see a rapid pace of innovation in that underlying. So it's a very leveraged way to do it, and I see that as a real opportunity ahead. \n In terms of the challenges, I think it's been a mindset shift, which we've been driving across the company to make sure that we are embracing this opportunity but being very efficient in how we are approaching it, making sure we are redirecting our people to the highest priorities across the company, building on our 20 years of experience in driving machine efficiencies year-on-year so that we can put our dollars to work as efficiently as possible. So making sure balancing all of that moving forward in a very bold and responsible way at the same time. Those are the important things to get right from my perspective. \nOperator: Our next question comes from Stephen Ju with UBS. \nStephen Ju: Philipp, I think it's approaching the 2-year anniversary for the launch of Ads on YouTube Shorts. And you've given us an update on monetization pickup sequentially. But with that in mind, I think YouTube has launched an array of ad products and automation tools to help advertisers transfer what they're doing to the vertical screen. So how is this translating into buy-in among your advertiser clients?\n And secondly, based on what you've seen over the last 2 years, are there any structural reasons that you can cite as to why the monetization cannot match what is already the case on the horizontal screen? \nPhilipp Schindler: Yes. Look, this is a great question, first of all. I mean, let's start with the fact that YouTube performance was very strong in this quarter. And on Shorts specifically in the U.S., I mentioned how the monetization rate of Shorts relative to in-stream viewing has more than doubled in the last 12 months. I think that's what you were referring to. And yes, we're obviously very happy with this development.\n The way to think about it is advertisers really only spend with us when they see a positive ROI. So you can assume that this wouldn't be happening unless it were to work for advertisers in the short term and also in the long term. That's an important part, I think. \n Overall, Shorts is a long-term bet for the business. It has really helped us respond to both creator and viewer demand for short-form video. We talked about the strong growth, averaging 70 billion daily views. I mentioned the number of channels uploading has increased 50% year-over-year, so again, very happy with us development. And to your question, structural reasons, whether we can't get to a match here, I have a hard time seeing those at the moment over time. \nOperator: Our next question comes from Justin Post with Bank of America. \nJustin Post: I'm going to ask another one on CapEx. It seems to be your biggest investment area. Just first, you saw the big uptick the last 2 quarters, but you've been investing in AI for years. Is the uptick because supply is getting easier to get? Or do you see more opportunities with the available supply to really fuel AI? So has the GPUs and everything gotten better that you feel more, investing more? And then thinking about the returns, both for Advertising and Cloud on the CapEx, do you feel like this is a higher cost of doing business? Or do you think this is an opportunity to even get better returns on your capital spend than you've had in the past? \nRuth Porat: So the increase in CapEx, as Sundar said and I said, really reflects the opportunity we continue to see across the company. It starts with all that we're doing in support of the Gemini foundational model but then also, clearly, the work across Cloud, on behalf of Cloud customers, and the growth that we're seeing with GCP and the infrastructure work there, and then, of course, as both Sundar and Philipp talked about the application across Search, YouTube and, more broadly, the services that we're able to offer. So it's the growing application and our focus on ensuring that we have the compute capacity to deliver in support of the services and opportunities we see across Alphabet. \n And it really goes to the second part of your question, which is that as we're investing in CapEx and applying it across our various businesses, it opens up more services and products, which bring revenue opportunities. And we're very focused on the monetization opportunity. It does underlie everything that we're doing in Google Services and Google Cloud. And as Sundar noted, we're, at the same time, very focused on the efficiency of all elements of delivering that compute capacity from hardware, software and beyond. \nOperator: Our next question comes from Mark Mahaney with Evercore. \nJian Li: This is Jian Li for Mark Mahaney. A couple of questions. One, just maybe an expansion on the Search, query questions on before, more like Search volume, and maybe in the context of the off-Google environment like AI chat bot, for example, we've seen kind of Meta AI directing to Google Search results. Do you think there's actually a scenario where like AI system can create a step function change in Search volume or use cases of Google? If you can give us more color on what are you seeing right now or what are you expecting to see in that area.\n And then the second question on just the comment of YouTube and Cloud exiting at $100 billion run rate. What is informing this outlook or visibility for you? If you can talk about, is it driven by any sort of Cloud demand inflection or step change in the gen AI workload demand, if you can flesh it out a little bit? \nSundar Pichai: On your first question, look, I said this before but to be clear, we view this moment as a positive moment for Search. And I think it allows us to evolve our product in a profound way. And Search is a unique experience. People come, be it if you want answers, if you want to explore more, if you want to get perspectives from across the web, and to be able to do it across the breadth and depth of everything they are looking for and the innovation you would need to keep that up, I think it's what we've been building on for a long time. And so I feel we are extraordinarily well set up, particularly given the innovation path we are on. And overall, I view this moment as a positive moment. So that's how I would say it. \n On the second part, Ruth? \nRuth Porat: Sorry, what was it? \nSundar Pichai: YouTube and Cloud. \nJian Li: Yes, in terms of your comment about $100 billion exit rate for YouTube and Cloud, what's driving this visibility for you and any kind of inflection you're seeing in the Cloud demand? \nRuth Porat: I would just say from Sundar's opening comments, it's just the ongoing momentum that we've seen in the business that we've been talking about, the ongoing growth and strong performance. And so what we were really getting at in that comment, what Sundar was getting at, is that we've continued to build strong businesses over time, and that just helps dimension it. We had similar comments last quarter when you talk about our subscription business. We're really proud of all the work that the teams are doing across the company, building new, strong opportunities, delivering for our users, for customers, for advertisers in profound ways. And so it was just helping to dimension what we have built over the years. \nOperator: Our next question comes from Ken Gawrelski with Wells Fargo. \nKenneth Gawrelski: Two, if I may. First on GCP, you had nice acceleration in the quarter. Could you talk a little bit about the opportunities and constraints upon GCP's ability to continue to address that large addressable market and accelerate growth? Is it more sales-oriented? Is it more product sales solutions or both? And do you plan to address most of these organically? Or could a partner approach work for you?\n And then the second one, just more detail on YouTube and sports rights. Could you reiterate your view on further live sports rights? There's some larger, mostly in the U.S., league rights coming up soon and will be more over the next several years. Could you just talk about your philosophy there beyond NFL Sunday Ticket? \nSundar Pichai: Look, on the Cloud side, obviously, it's definitely a point of inflection overall. I think the AI transformation is making everyone think about their whole stack, and we are engaged in a number of conversations. I think paid AI infrastructure, people are really looking to Vertex AI, given our depth and breadth of model choice, or using Workspace to transform productivity in your workplace, et cetera. So I think the opportunities there are all related to that, both all the work we've built up and AI being a point of inflection in terms of driving conversations. I think you'll see us do it both organically and with a strong partner program as well. So we'll do it with a combination. \n And the challenges here, always, there are switching costs to Cloud and the challenges we see is how do we make it easier for people. There's a lot of interest, but there's definitely barriers in terms of people switching. And so that's an area where we are constantly investing to make it easier for our customers. \nPhilipp Schindler: And with regard to your sports rights question, look, I mean, we've had long-standing and significant partnerships with the most popular sports league here in the U.S., around the globe, federations teams, athletes, broadcasters. And obviously, these partnerships, in combination with our very vast audience of sports fans, drives investment in subscription experiences across many offerings: NFL Sunday Ticket, YouTube TV, YouTube Primetime Channels and so on. But there's nothing that we have to announce at the moment. We're obviously always looking at where we can create more value for our users, for our advertisers, for creators, but nothing specific to talk about at this moment. \nOperator: Our next question comes from Ross Sandler with Barclays. \nRoss Sandler: Sundar, I had a question about smartphone-based AI searches. So you guys are powering all these new AI interactions and searches on Pixel and on Samsung devices. And I think there's speculation that Gemini might be used on iOS in a future state. So the question is, as users start searching on smartphones and those searches are basically rendered on the model, on the phone, without accessing the web, how do you guys anticipate monetizing some of these smartphone-based behaviors that are kind of run on the edge? Any thoughts on that? \nSundar Pichai: Look, I think if you look at what users are looking for, people are looking for information and an ability to connect with things outside. So I think there will be a set of use cases which you will be able to do on device. But for a lot of what people are looking to do, I think you will need the richness of the cloud, the Web and you have to deliver it to users. So again, to my earlier comments, I think through all these moments, you saw what we have done with Samsung with Circle to Search. I think it gives a new way for people to access Search conveniently wherever they are. And so we view this as a positive way to bring our services to users in a more seamless manner. So I think it's positive from that perspective. \n In terms of on-device versus cloud, there will be needs which can be done on-device and we should to help it from a privacy standpoint. But there are many, many things for which people will need to reach out to the cloud. And so I don't see that as being a big driver in the on-cloud versus off-cloud in any way. \nOperator: And our last question comes from Colin Sebastian with Baird. \nColin Sebastian: I guess first, a follow-up on some of the questions on SGE in the core Search. I guess I'm wondering, along with some of those changes in behavior, is there a way to quantify that overall engagement shift, whether that's an increase in time spent or the level of increase in queries for both sort of traditional search as well as more generative answers.\n And then secondly, on the hardware road map, I assume later this year, we'll hear more about some of the products. But any areas of particular focus or that you would point out that we should keep in mind in terms of hardware launches in the back half? \nSundar Pichai: On the first question on Search, not much more to add to what I said, but what we have seen. And we've been in live experiments just for a few weeks in U.S. and U.K. on a slice of our queries, and all indications are positive that it improves user satisfaction. We see an increase in engagement, but I see this as something which will play out over time.\n But if you were to step back at this moment, there were a lot of questions last year, and we always felt confident and comfortable that we would be able to improve the user experience. People question whether these things would be costly to serve, and we are very, very confident we can manage the cost of how to serve these queries. People worried about latency. When I look at the progress we have made in latency and efficiency, we feel comfortable. There are questions about monetization. And based on our testing so far, I'm comfortable and confident that we'll be able to manage the monetization transition here well as well. It will play out over time, but I feel we are well positioned. And more importantly, when I look at the innovation that's ahead and the way the teams are working hard on it, I am very excited about the future ahead. \nOperator: And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Jim Friedland for any further remarks. \nJames Friedland: Thanks, everyone, for joining us today. We look forward to speaking with you again on our second quarter 2024 call. Thank you, and have a good evening. \nOperator: Thank you, everyone. This concludes today's conference call. Thank you for participating. You may now disconnect.",
'published': '2024-04-25',
'title': 'GOOG 2024Q1',
'author': 'GOOG'}]df = pd.DataFrame(data)
df| ticker | quarter | pub_quarter | year | full_content | published | title | author | |
|---|---|---|---|---|---|---|---|---|
| 0 | GOOG | 2023Q4 | 2024Q1 | 2023 | Operator: Welcome, everyone. Thank you for sta... | 2024-01-30 | GOOG 2023Q4 | GOOG |
| 1 | GOOG | 2024Q4 | 2025Q1 | 2024 | Operator: Welcome, everyone. Thank you for sta... | 2025-02-04 | GOOG 2024Q4 | GOOG |
| 2 | GOOG | 2024Q3 | 2024Q4 | 2024 | Operator: Welcome, everyone. Thank you for sta... | 2024-10-29 | GOOG 2024Q3 | GOOG |
| 3 | GOOG | 2024Q2 | 2024Q3 | 2024 | Operator: Welcome, everyone. Thank you for sta... | 2024-07-23 | GOOG 2024Q2 | GOOG |
| 4 | GOOG | 2024Q1 | 2024Q2 | 2024 | Operator: Welcome, everyone. Thank you for sta... | 2024-04-25 | GOOG 2024Q1 | GOOG |
Doc FieldSturdy Statistics enables you to upload any metadata you want. The only requirement is that your core text content be stored under the field doc. Below, the field full_content contains the entirety of each quarter’s earnings call transcript. We rename the field full_content to doc.
df2 = df.rename(columns={"full_content": "doc"})
print(df2.doc.iloc[0][:400] + " .....")Operator: Welcome, everyone. Thank you for standing by for the Alphabet Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead.
James Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's Fourth Quarter 2023 Earnings Conference Cal .....The upload accepts a list of dictionaries (JSON records format). Our only requirement is a plain-text field named doc which contains the text you want to analyze. You can optionally provide a doc_id identifier for each document; if you do not provide one, we will generate one for you.
If you specify a doc_id which already exists, you can append metadata to the document (by leaving the doc field blank), or overwrite the doc content for that document (by placing new content in the doc field.)
_ = index.upload(df2.to_dict("records"))
job = index.train(fast=True, wait=False)Uploading data to UNTRAINED index for training.
uploading data to index...
committing changes to index "index_0f8c9d42e7694faea302d458f84b179c"...Once the model is finished training, you leveraging all of Sturdy Statistics structured analysis APIs to explore your data.
index = Index(id='index_1efdb1f80fe243038f3d3a8e544f8c9f')Found an existing index with id="index_1efdb1f80fe243038f3d3a8e544f8c9f".topic_df = index.topicSearch()
topic_df["title"] = "Google Earnings Calls"
fig = px.sunburst(
topic_df,
path=["title", "topic_group_short_title", "short_title"],
values="prevalence",
hover_data=["topic_id", "mentions"]
)
fig = procFig(fig, height=500)
fig.show()from sturdystats import Index
index = Index("Custom Analysis")
index.upload(df.to_dict("records"))
index.commit()
index.train()
# Ready to Explore
index.topicSearch()
