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Alphabet’s (GOOGL - Free Report) second-quarter 2024 earnings of $1.89 per share beat the Zacks Consensus Estimate by 2.2%. The figure grew 31.3% year over year.
Revenues of $84.74 billion increased 14% year over year (15% at constant currency).
Net revenues, excluding total traffic acquisition costs (“TAC”) (the portion of revenues shared with Google’s partners, and the amount paid to distribution partners and others who direct traffic to Google’s website), were $71.35 billion, which surpassed the consensus mark by 1.1%. The figure rose 15% from the year-ago quarter.
TAC of $13.4 billion rose 6.8% year over year.
Solid momentum across Search and YouTube contributed well. The growing cloud segment was a major positive. Accelerating advertisement revenues acted as tailwinds.
Alphabet has gained 30.3% year to date, outperforming 25.7% growth of the Zacks Internet-Services industry.
However, Alphabet continued to witness sluggishness in Google Network ads, which was concerning.
Nevertheless, the company’s growing investments in AI, and strength in its Search and cloud businesses are likely to yield massive returns in the days ahead. Growing momentum in Generative AI is another positive.
Alphabet reports revenues under Google Services, Google Cloud and Other Bets.
Google Services:
Revenues from the Google Services business increased 11.5% year over year to $73.93 billion, accounting for 87.2% of the total revenues. The figure beat the Zacks Consensus Estimate of $73.43 billion.
Under this business, search revenues from Google-owned sites increased 13.8% year over year to $48.51 billion, surpassing the Zacks Consensus Estimate of $47.5 billion.
YouTube’s advertising revenues improved 13% year over year to $8.7 billion, while Network advertising revenues decreased 5.2% to $7.44 billion. YouTube ad revenues lagged the Zacks Consensus Estimate of $8.9 billion, while Network ad revenues lagged the consensus mark of $7.9 billion.
Total Google advertising revenues rose 11.1% year over year to $64.62 billion and accounted for 76.3% of the total revenues. The figure beat the consensus mark of $64.3 billion.
Google subscriptions, platforms and devices revenues, formerly known as Google Other revenues, were $9.3 billion in the second quarter, up 14.4% year over year. The figure beat the consensus mark of $9.2 billion.
Google Cloud:
Google Cloud revenues rose 28.8% year over year to $10.35 billion, accounting for 12.2% of the quarter’s total revenues. The reported metric surpassed the Zacks Consensus Estimate of $10.08 billion.
Other Bets:
Other Bets’ revenues were $365 million, up 28.1% year over year and accounting for 0.4% of the total second-quarter revenues. The figure missed the consensus mark of $415 million.
Regional Details
EMEA (29.1% of the total revenues): GOOGL generated $24.7 billion in revenues from the region, increasing 11% year over year.
APAC (16.3% of the total revenues): The region generated $13.8 billion in revenues, up 9% from the year-ago quarter.
Other Americas (5.8% of the total revenues): The region generated $4.94 billion in revenues, up 9% on a year-over-year basis.
United States (48.6% of the total revenues): Alphabet generated $41.2 billion in revenues from the region, which increased 17% from the prior-year quarter.
Operating Details
Costs and operating expenses were $57.32 billion, up 8.6% year over year. As a percentage of revenues, the figure contracted 310 basis points (bps) from the year-ago quarter.
The operating margin was 32%, which expanded 300 bps year over year. Segment-wise, Google Services’ operating margin of 40.1% expanded 470 bps from the prior-year quarter.
Google Cloud reported an operating margin of 11.3%, which expanded 640 bps year over year.
Other Bets reported a loss of $1.13 billion compared with a loss of $813 million in the prior-year quarter.
Balance Sheet
As of Jun 30, 2024, cash, cash equivalents and marketable securities were $100.7 billion, down from $108.1 billion as of Mar 31, 2024.
Long-term debt was $13.24 billion at the end of the reported quarter compared with $13.23 billion at the end of the previous quarter.
Alphabet generated $26.6 billion of cash from operations in second-quarter 2024 compared with $28.8 billion in first-quarter 2024.
GOOGL spent $13.2 billion on capex, netting a free cash flow of $13.45 billion in the reported quarter.
Image: Bigstock
Alphabet (GOOGL) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Alphabet’s (GOOGL - Free Report) second-quarter 2024 earnings of $1.89 per share beat the Zacks Consensus Estimate by 2.2%. The figure grew 31.3% year over year.
Revenues of $84.74 billion increased 14% year over year (15% at constant currency).
Net revenues, excluding total traffic acquisition costs (“TAC”) (the portion of revenues shared with Google’s partners, and the amount paid to distribution partners and others who direct traffic to Google’s website), were $71.35 billion, which surpassed the consensus mark by 1.1%. The figure rose 15% from the year-ago quarter.
TAC of $13.4 billion rose 6.8% year over year.
Solid momentum across Search and YouTube contributed well. The growing cloud segment was a major positive. Accelerating advertisement revenues acted as tailwinds.
Alphabet has gained 30.3% year to date, outperforming 25.7% growth of the Zacks Internet-Services industry.
However, Alphabet continued to witness sluggishness in Google Network ads, which was concerning.
Nevertheless, the company’s growing investments in AI, and strength in its Search and cloud businesses are likely to yield massive returns in the days ahead. Growing momentum in Generative AI is another positive.
Alphabet Inc. Price, Consensus and EPS Surprise
Alphabet Inc. price-consensus-eps-surprise-chart | Alphabet Inc. Quote
Segments in Detail
Alphabet reports revenues under Google Services, Google Cloud and Other Bets.
Google Services:
Revenues from the Google Services business increased 11.5% year over year to $73.93 billion, accounting for 87.2% of the total revenues. The figure beat the Zacks Consensus Estimate of $73.43 billion.
Under this business, search revenues from Google-owned sites increased 13.8% year over year to $48.51 billion, surpassing the Zacks Consensus Estimate of $47.5 billion.
YouTube’s advertising revenues improved 13% year over year to $8.7 billion, while Network advertising revenues decreased 5.2% to $7.44 billion. YouTube ad revenues lagged the Zacks Consensus Estimate of $8.9 billion, while Network ad revenues lagged the consensus mark of $7.9 billion.
Total Google advertising revenues rose 11.1% year over year to $64.62 billion and accounted for 76.3% of the total revenues. The figure beat the consensus mark of $64.3 billion.
Google subscriptions, platforms and devices revenues, formerly known as Google Other revenues, were $9.3 billion in the second quarter, up 14.4% year over year. The figure beat the consensus mark of $9.2 billion.
Google Cloud:
Google Cloud revenues rose 28.8% year over year to $10.35 billion, accounting for 12.2% of the quarter’s total revenues. The reported metric surpassed the Zacks Consensus Estimate of $10.08 billion.
Other Bets:
Other Bets’ revenues were $365 million, up 28.1% year over year and accounting for 0.4% of the total second-quarter revenues. The figure missed the consensus mark of $415 million.
Regional Details
EMEA (29.1% of the total revenues): GOOGL generated $24.7 billion in revenues from the region, increasing 11% year over year.
APAC (16.3% of the total revenues): The region generated $13.8 billion in revenues, up 9% from the year-ago quarter.
Other Americas (5.8% of the total revenues): The region generated $4.94 billion in revenues, up 9% on a year-over-year basis.
United States (48.6% of the total revenues): Alphabet generated $41.2 billion in revenues from the region, which increased 17% from the prior-year quarter.
Operating Details
Costs and operating expenses were $57.32 billion, up 8.6% year over year. As a percentage of revenues, the figure contracted 310 basis points (bps) from the year-ago quarter.
The operating margin was 32%, which expanded 300 bps year over year. Segment-wise, Google Services’ operating margin of 40.1% expanded 470 bps from the prior-year quarter.
Google Cloud reported an operating margin of 11.3%, which expanded 640 bps year over year.
Other Bets reported a loss of $1.13 billion compared with a loss of $813 million in the prior-year quarter.
Balance Sheet
As of Jun 30, 2024, cash, cash equivalents and marketable securities were $100.7 billion, down from $108.1 billion as of Mar 31, 2024.
Long-term debt was $13.24 billion at the end of the reported quarter compared with $13.23 billion at the end of the previous quarter.
Alphabet generated $26.6 billion of cash from operations in second-quarter 2024 compared with $28.8 billion in first-quarter 2024.
GOOGL spent $13.2 billion on capex, netting a free cash flow of $13.45 billion in the reported quarter.
Zacks Rank & Stocks to Consider
Currently, Alphabet has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Badger Meter (BMI - Free Report) and Apple (AAPL - Free Report) . Arista Networks sports a Zacks Rank #1 (Strong Buy) at present, and Badger Meter and Apple carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks shares have gained 45.3% in the year-to-date period. The long-term earnings growth rate for ANET is projected at 16.07%.
Badger Meter shares have gained 30.9% in the year-to-date period. The long-term earnings growth rate for BMI is expected to be 16.73%.
Apple shares have gained 16.6% in the year-to-date period. The long-term earnings growth rate for AAPL is anticipated to be 12.48%.