Displaying items by tag: Ruth Porat
Google earnings hit by ‘significant slowdown’ in ad sales
Google parent Alphabet has reported a slowdown in first-quarter revenue growth, as the Covid-19 pandemic led to a drop in advertising on the search engine from March. Revenues rose 13 percent year-on-year to USD 41.2 billion, down from 17 percent annual growth a year earlier and in Q4.
The US giant exceeded dim earnings expectations, showing higher revenue and profits despite a coronavirus-induced slowdown in its core advertising operations. Alphabet shares leapt more than eight percent in after-hours trades following release of earnings figures that eased fears the pandemic would stall the internet firm's income engine.
Alphabet reported a profit of $6.8 billion in the first three months of the year, up nearly three percent from last year, on revenue that grew 13 percent to $41 billion. The Silicon Valley giant, the first of the big technology firms to report quarterly results, offered a mixed picture: a strong start to the year followed by an abrupt slowdown in advertising in March and some tentative signs the worst may be over.
Chief financial officer Ruth Porat pointed to "very early signs of recovery in commercial search behavior by users" but added that "it is not clear how durable or monetizable this behavior will be."
Still, the report showed one of the major tech firms weathering the crisis and seeing some hopeful signs in advertising, which represents the lion's share of Alphabet revenue and is closely tied to economic conditions.
"In a quarter of bad news, this was really good news," said analyst Rob Enderle of Enderle Group, who predicted improvement in the digital ad market in May and June.
Baird analyst Colin Sebastian expected the current quarter to be "the bottom" of an online advertising trough at Alphabet, while noting growth in its YouTube and cloud computing revenues.
"This is probably exactly what technology needed at a time when many suspected FANG/Tech could be rolling over," Mark Newton of Newton Advisors said in a tweet, referring to the acronym for the big tech firms Facebook, Amazon, Netflix and Google.
Alphabet executives remained cautious in their outlook, noting that the company is cutting back on hiring, marketing, office expansion and other expenses while continuing to invest in promising long-term trends like companies moving more aggressively to services hosted in the internet cloud.
"It is now clear that once the emergency has passed, the world will not look the same," Alphabet-Google chief Sundar Pichai said during an earnings call.
"Some social norms will change, and many businesses are speaking to us looking to reinvent their operations."
Google services, data centers, and software capabilities are positioned to help with trends in online education, healthcare, entertainment, and shopping likely to continue after the pandemic has ended, according to Pichai.
Overall ad revenues for Google rose 10 percent for the quarter despite the pandemic's worsening in March.
YouTube's ad revenue was up about a third to $4 billion as people turned to online entertainment while they hunkered down at home to avoid the coronavirus.
The pandemic has disrupted operations at tech powerhouses known themselves for disrupting traditional business models.
Fewer people are buying new smartphones; more people are online and using social platforms but online advertising is slumping; cloud computing needs are growing; and more consumers are relying on delivery of essential goods from Amazon.
Along with other tech firms, Google has been highlighting its role in helping consumers and authorities in the battle against COVID-19.
Pichai said that "we've marshaled our resources" to assist people during the crisis.
"Given the depth of the challenges so many are facing, it's a huge privilege to be able to help at this time," he said.
Google has teamed up with longtime rival Apple to develop technology for coronavirus smartphone "contact tracing" by allowing devices from the two platforms to communicate and indicate when people have crossed paths with an infected person.
YouTube said it began adding fact-check panels to search results in the US for videos on hot-topic claims shown to be bogus.
The report showed revenue rose 26 percent to $170 million for Alphabet's "other bets" which include the Waymo self-driving car project, Wing drone delivery and Verily life sciences. But these "moonshot" projects produced a collective operating loss of $1.1 billion.
Alphabet’s revenues up 24 percent year-on-year
Alphabet Inc., the parent company of Google, announced its financial results for Q3 on Oct. 26, for the quarter ended Sept. 30. The company’s revenues were up 24 percent year-on-year, reflecting strength across Google and other bets. “Our momentum is a result of investments over many years in fantastic people, products and partnerships,” said Ruth Porat, FCO of Alphabet.
The company had a “terrific quarter” said Porat in a conference call with media. Revenues of $27.8 billion were up 24 percent year-on-year, and also up 24 percent in constant currency. Advertizing revenues benefited from strong performance in sites, which was powered by strong results in mobile search.
The company saw growth in network revenues which was led by its programmatic business. Alphabet also benefited from growth in revenues from cloud, play and hardware.
Alphabet’s performance was strong in all regions, Porat said. US revenues were $12.9 billion, up 21 percent year-on-year. Europe, Middle East and Africa revenues were $9.1 billion, up 23 percent year-on-year. Asia Pacific revenues were $4.2 billion, up 29 percent versus 2016. Other Americas revenues were $1.5 billion, up 33 percent year-on-year.
The company’s operating expenses were $8.8 billion, up 11 percent year-on-year, reflecting the change in the timing of its annual equity refresh cycle from the third quarter to the first quarter of each year. Operating income was $7.8 billion, up 35 percent versus 2016, and the operating margin was 28 percent. Other income and expense was $197 million.
Google contributed revenues of $27.5 billion, up 23 percent year-on-year. In terms of the revenue detail, Porat said, Google site revenues were $19.7 billion in Q3, up 23 percent year-on-year, led by mobile search, and complemented by desktop search and strong performance from YouTube.
Meanwhile, Alphabet’s Network revenues were $4.3 billion, up 16 percent year-on-year, reflecting the ongoing momentum of programmatic AdMob, a Google-owned advertizing company. Other revenues for Google were $3.4 billion, up 40 percent year-on-year, fueled by cloud, play and hardware.
Total traffic acquisitions were $5.5 billion or 23 percent of total advertizing revenues and up 32 percent year-on-year. Other Bets revenues – generated by Nest, Fiber and Verily – were $302 million. Operating loss including the impact of SBC was $812 million for Q3.
“Nest continues to drive ongoing product expansion with a number of notable launches including the Nest Thermostat E, which is offered at a lower price point than the Nest Learning Thermostat,” said Porat. “Nest also announced a home security solution that includes the Nest Secure alarm system, Nest Hello video doorbell, the Nest Cam IQ outdoor security camera and corresponding software and services.”
Porat added, “Waymo continues to expand its geographic presence and announced this morning that it will commence winter testing in Michigan to build on our progress to-date addressing the challenge of autonomous driving in cold weather, particularly with snow, sleet and ice. Michigan is the sixth state where Waymo is testing its self-driving vehicles. Over the last eight years, Waymo's cars have self-driven in more than 20 cities.”
Porat also mentioned Project Loon, a research and development project being developed by Alphabet subsidiary X with the mission of providing Internet access to rural and remote areas. Alphabet has been collaborating with companies such as SES and AT&T to deliver emergency Internet service to the hardest hit parts of Puerto Rico.
Google CEO Sundar Pichai said he has been “really proud of the progress this quarter, launching popular new products and continuing to grow our business in new areas. It's been particularly exciting to see our early bet on artificial intelligence pay off and go from a research project to something that can solve new problems for a billion people a day.”
Mobile search and YouTube behind Alphabet Google’s strong profits
California-based Alphabet, parent company of Google, reported strong profit growth on Thursday, 26 January, for the final three months of 2016. The company saw its profits rise on growth in mobile search and its video-sharing service YouTube. Google remains as Alphabet’s majority operating unit and advertising is still the company’s main source of profit.
According to Alphabet its net income increased eight percent to $5.3 billion, which wasn’t as high as industry predictions on Wall Street, despite better-than-expected revenue. For earnings purposes, Alphabet categorizes operations such as self-driving cars and Nest smart thermostats into an “Other Bets” category, which almost doubled revenue to $262 million in the quarter, but still posted a loss of nearly $1.1 billion.
Alphabet’s revenue in the final quarter of last year reached $26 billion, up 22 percent from the same period the previous year. However, the company’s shares dropped more than two percent to $838 in after-market trade that followed the release of the earnings figures.
Alphabet chief financial officer Ruth Porat said in a release, “Our growth in the fourth quarter was exceptional,” crediting mobile search and YouTube which drove the high performance. “We’re seeing great momentum in Google’s newer investment areas and ongoing strong progress in Other Bets.”
Alphabet, under its new structure, is said to be expanding beyond its role as a search engine that provides advertising linked to queries. The company last year leveled up to its rivals Apple, Samsung and Amazon by pushing into hardware, launching premium-priced, in-house designed artificial intelligence products.
Google also revealed its new "home assistant" which aims to compete with Amazon's Alexa-powered devices as a hub for the smart home, and has been working to become the platform for some connected cars. During an earnings call, Google chief executive Sundar Pichai said he is deeply involved with the company’s push into artificial intelligence, believing there is a lot of potential in digital assistance to make services such as mobile search more helpful to users.
“In the long run, I think we will evolve from a mobile first to an AI first world,” said Pichai. “We are at the forefront and pushing and pushing hard and getting there.” According to Porat, the bulk of the money taken in came from "Other Bets" came from Nest, Verily, and a Fiber unit building super-fast internet lines in select US cities.
It was recently announced that Singapore-based sovereign based fund Temasek will invest $800 million in Verily, the Alphabet subsidiary focused on healthcare. The infusion of cash, for which Temasek will get a minority stake, comes as Verily works to bring some of its creations to market. Verily was known as Google Life Sciences but rebranded after the internet giant became Alphabet in a corporate restructuring.
Verily specializes in applying technology to problems in health and biology. Among the ideas discussed has been building a sickness-sensing diagnostic device along the lines of the "tricorder" seen in "Star Trek" science fiction films and television shows.
Source says Google Fiber is being put on hold to explore cheaper alternatives
"Google Fiber is already up and running in seven other major cities, outside California, but a source familiar with the project says the company is putting additional fiber locations on the back burner to reassess the technology and explore a cheaper alternative—wireless service that does not require expensive, capital-intensive and time-consuming installation of fiber cables under the ground," the Mercury News reported. "The source said Google is now focusing more on aerial installation."
Google has told at least two Silicon Valley cities that it is putting plans to provide lightning-fast fiber internet service on hold while the company explores a cheaper alternative.
The news comes nearly three months after San Jose officials approved a major construction plan to bring Google Fiber to the city. Mountain View and Palo Alto also were working with Google to get fiber internet service but said Monday that the company told them the project has been delayed.
"It was a surprise," said Mountain View public works director Mike Fuller, who added that Google told city officials the company was still committed to providing fiber service in Mountain View. "We didn't expect it because we were working on what was their plan at the time."
Google Fiber was scheduled to announce its official launch in San Jose within months, but plans seemed to stall after the company obtained final permits in May to begin a three-year construction project. At the time, the company estimated that 60 percent of its cable network would be underground and 40 percent would be aerial.
The company was set to begin digging in San Jose last month, but nearly 100 employees hired to install Google Fiber were pulled into an office and told the project was being delayed, according to workers. They were offered a transfer to San Diego to work on an unrelated project.
“We continue to see Fiber as a huge market opportunity,” said CFO Ruth Porat, citing the company’s efforts to push “the frontier with tech applications.”
She continued: “We’re exploring both Fiber and wireless, and you may have seen our recent acquisition of Webpass.” Fiber snapped up the small internet provider Webpass, which relies on wireless tech to serve city markets.
Porat, being a Google executive, did not get into any details on Fiber’s plans here. She did reiterate that it is the biggest source of spending outside of the core Google business.
Google's parent company, Alphabet Inc., recently acquired Webpass Inc., and is expected to adopt its wireless technology, which provides superfast internet service at lower costs without digging up city streets. Webpass' wireless approach involves
Google Fiber is already up and running in seven other major cities, outside California, but a source familiar with the project says the company is putting additional fiber locations on the back burner to reassess the technology and explore a cheaper alternative -- wireless service that does not require expensive, capital-intensive and time-consuming installation of fiber cables under the ground. The source said Google is now focusing more on aerial installation.
Google competitors including AT&T and Comcast have been blocking the company from accessing privately owned utility poles, which could provide a cheaper option than burying cable for fiber.
Google Fiber spokeswoman Veronica Navarrete said company officials will continue talks with San Jose, Palo Alto, Santa Clara, Sunnyvale and its hometown of Mountain View about providing internet service, but added that it "takes time" to deploy "the latest technologies in alignment with our product road map, while understanding local considerations and challenges."
San Jose leaders said Monday that they're hopeful Google's future plans -- even if services take a different shape or form -- will involve the city, especially after nearly two years of discussions over how to give residents faster connections.
"The fiber ball is entirely in Google's court," said city spokesman David Vossbrink. "We're very optimistic that their plans for extending their high speed broadband system will include San Jose, even if their original schedule gets modified so they can take advantage of technology advances that might be potentially less disruptive."
In Palo Alto, a city staff report said deployment of Google Fiber has been delayed "up to six months or more."
"Google indicated that they are exploring more innovative ways of deployment that overcome some of the challenges they are facing in their current builds," the report said.