Alphabet (GOOG) Tops Q2 EPS and Revenue
(Updated - July 25, 2019 4:05 PM EDT)
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) reported Q2 EPS of $14.21, $2.88 better than the analyst estimate of $11.33. Revenue for the quarter came in at $38.94 billion versus the consensus estimate of $38.17 billion.
"Our effort to build a more helpful Google for everyone brings countless opportunities to help users, partners, and enterprise customers every day," said Sundar Pichai, Chief Executive Officer of Google. "From improvements in core information products such as Search, Maps, and the Google Assistant, to new breakthroughs in AI and our growing Cloud and Hardware offerings, I’m incredibly excited by the momentum across Google’s businesses and the innovation that is fueling our growth."
"With revenues of $38.9 billion, up 19% versus the second quarter of 2018 and up 22% on a constant currency basis, we’re delivering strong growth," said Ruth Porat, Chief Financial Officer of Alphabet and Google. "Our ongoing investments in compute capabilities and engineering talent reflect the compelling opportunities we see across the company."
Full Release:
Alphabet Announces Second Quarter 2019 Results
MOUNTAIN VIEW, Calif. – July 25, 2019 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended June 30, 2019.
“Our effort to build a more helpful Google for everyone brings countless opportunities to help users, partners, and enterprise customers every day,” said Sundar Pichai, Chief Executive Officer of Google. “From improvements in core information products such as Search, Maps, and the Google Assistant, to new breakthroughs in AI and our growing Cloud and Hardware offerings, I’m incredibly excited by the momentum across Google’s businesses and the innovation that is fueling our growth.”
"With revenues of $38.9 billion, up 19% versus the second quarter of 2018 and up 22% on a constant currency basis, we’re delivering strong growth," said Ruth Porat, Chief Financial Officer of Alphabet and Google. "Our ongoing investments in compute capabilities and engineering talent reflect the compelling opportunities we see across the company."
Q2 2019 financial highlights
The following table summarizes our consolidated financial results for the quarters ended June 30, 2018 and 2019 (in millions, except for per share information, percentages, and number of employees; unaudited). Prior period results excluding the effect of the European Commission (EC) fine of $5.1 billion have been included to facilitate comparison to current quarter performance.
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2019 | ||||||
Revenues | $32,657 | $38,944 | |||||
Increase in revenues year over year | 26 | % | 19 | % | |||
Increase in constant currency revenues year over year | 23 | % | 22 | % | |||
Operating income(1) | $3,045 | $9,180 | |||||
Operating margin(1) | 9 | % | 24 | % | |||
Operating income (Non-GAAP)(1)(2) | $8,116 | $9,180 | |||||
Operating margin (Non-GAAP)(1)(2) | 25 | % | 24 | % | |||
Other income (expense), net(1) | $1,170 | $2,967 | |||||
Net income | $3,195 | $9,947 | |||||
Diluted EPS | $4.54 | $14.21 | |||||
Net income (Non-GAAP)(2) | $8,266 | $9,947 | |||||
Diluted EPS (Non-GAAP)(2) | $11.75 | $14.21 | |||||
Diluted shares (in thousands) | 703,247 | 699,954 | |||||
Effective tax rate | 24 | % | 18 | % | |||
Number of employees | 89,058 | 107,646 | |||||
(1) | Q2 2018 results have been recast to reflect the reclassification of performance fees from general and administrative expenses to other income (expense), net (OI&E) to conform to the current period presentation. |
(2) | Non-GAAP results presented for Q2 2018 exclude the EC fine. See the table captioned "Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures" for more details. |
Q2 2019 supplemental information (in millions, except for percentages; unaudited)
Segment revenues and operating results
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2019 | ||||||
Google properties revenues | $23,262 | $27,335 | |||||
Google Network Members' properties revenues | 4,825 | 5,266 | |||||
Google advertising revenues | 28,087 | 32,601 | |||||
Google other revenues | 4,425 | 6,181 | |||||
Google segment revenues | $32,512 | $38,782 | |||||
Other Bets revenues | $145 | $162 | |||||
Google operating income | $8,959 | $10,388 | |||||
Other Bets operating loss | ($732 | ) | ($989 | ) | |||
Traffic acquisition costs (TAC) to Google Network Members and distribution partners
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2019 | ||||||
TAC to Google Network Members | $3,411 | $3,621 | |||||
TAC to Google Network Members as % of Google Network Members' properties revenues | 71 | % | 69 | % | |||
TAC to distribution partners | $3,009 | $3,617 | |||||
TAC to distribution partners as % of Google properties revenues | 13 | % | 13 | % | |||
Total TAC | $6,420 | $7,238 | |||||
Total TAC as % of Google advertising revenues | 23 | % | 22 | % | |||
Monetization metrics information
Change from Q2 2018 to Q2 2019 (YoY) | Change from Q1 2019 to Q2 2019 (QoQ) | ||||
Paid clicks on Google properties | 28 | % | 6 | % | |
Cost-per-click on Google properties | (11 | )% | (1 | )% | |
Impressions on Google Network Members' properties | 11 | % | 0 | % | |
Cost-per-impression on Google Network Members' properties | (1 | )% | 5 | % | |
Stock Repurchase
On July 24, 2019, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $25.0 billion of its Class C capital stock. The repurchase is expected to be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.
Webcast and conference call information
A live audio webcast of our second quarter 2019 earnings release call will be available at http://abc.xyz/investor. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, is also available on that site.
We also provide announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs, on our investor relations website (http://abc.xyz/investor).
Forward-looking statements
This press release may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2018, as amended, and our most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 which are on file with the SEC and areavailable on our investor relations website at http://abc.xyz/investor and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter endedJune 30, 2019. All information provided in this release and in the attachments is as of July 25, 2019. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
About non-GAAP financial measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: operating income (Non-GAAP); operating margin (Non-GAAP); net income (Non-GAAP); diluted earnings per share (Non-GAAP); free cash flow; constant currency revenues; and constant currency revenue growth. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as our revenues excluding the effect of foreign exchange rate movements and hedging activities or our operating performance excluding extraordinary fines. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures," "Reconciliation from net cash provided by operating activities to free cash flow" and "Reconciliation from GAAP revenues to non-GAAP constant currency revenues" included at the end of this release.
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