Alphabet (GOOG) Q2 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Ruth Porat, CFO & Senior VP

Advertising especially mobile search is driving top line growth

“For the quarter, our consolidated revenue grew 25% in constant currency versus last year. Once again, the primary driver was the increased use of Mobile Search by consumers, benefiting from our ongoing efforts to enhance the Mobile Search experience. We also benefited from solid growth in Desktop and Tablet Search as well as continued strength in YouTube and programmatic advertising.”

Strong currency headwinds negatively impacting growth

“ Alphabet revenues by geography highlight both the strength of our business around the globe as well as the impact the currency headwinds continue to have on our non-U.S. business relative to last year. ”

They are carefully managing expenses while seeking to grow revenues long-term

“I’ve commented many times that our focus on long-term revenue growth does not give us a pass on managing expenses. We invest a lot of time and effort in assessing how to manage for revenue growth with the utmost respect for the resources deployed and a focus on getting the best return on those resources, recognizing that in some areas secular trends are creating margin headwinds.”

They seek to have full autonomous cars

“Self-driving cars is in our Other Bets area…We’ve self-driven over 1.6 million miles. And the focus here for us is we’re solving a really big need, safety, access, and city efficiency…Our approach is quite different from most others. We’re focused on fully-autonomous cars because in early testing we saw the risk of depending on drivers to remain engaged once you give them the option to switch off.”

Sundar Pichai – CEO, Google, Inc.

Mobile is the focal point presently

“The strength of the quarter is about Mobile. It’s transformed the way that people consume information, and Google’s products have become a central and much-loved part of their experience. Our investment in Mobile now underlines everything that we do today, from Search and YouTube to Android and advertising. Mobile is the engine that drives our present. And now to our deep investments in machine learning and AI, we are building the engine that will drive our future.”

While machine learning is their future

“…machine learning is the engine that will drive our future, and it’s already making our products better and helping users every day. In fact, more than 100 teams are currently using machine learning at Google, from Street View to Gmail to Voice Search and more. For example, in Search, we use a ranking signal called RankBrain, which relies on deep learning to improve results. It’s already enhancing the search experience in 40 languages. And based on user testing, RankBrain can accurately guess which results users will favor with about 80% accuracy. Advances like this help us make our search results even more relevant.”

Increasingly more people are turning to voice search

“Voice is obviously very, very exciting for us. I mentioned this at I/O. if you look at Android, the Google app on Android in the U.S., 20% of the queries are voice queries. So today in terms of evolving to a conversational assistant, we have a big head start…it’s incredibly exciting to see how people interact with voice differently from text. It’s more intuitive. It’s more personal, and it’s a bit more emotional and an engaging experience for users.”

Youtube usage is growing strongly especially on mobile

“On YouTube, at a high level I would say we don’t have any new metrics. But on mobile alone, as I’ve said before, we reach more 18-to-34 and 18-to-49s than any other TV network, broadcast or cable. And every indication we see is that the growth is very, very strong, being driven by mobile, and it’s growing globally as well. So overall, I think engagement is very, very healthy.”