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Google: an elephant with a hard turn

via:雷锋网     time:2019/10/29 21:16:10     readed:70

On October 29, 2019, alphabet, Google's parent company, released its third quarter results as of September 30. According to the financial report, alphabet's total revenue in the third quarter was US $40.499 billion, up 20% from US $33.74 billion in the same period last year.

In addition, according to data provided by Yahoo Finance Channel, 37 analysts had expected that the average earnings per share of alphabet in the third quarter would be 12.42 US dollars, while the average earnings per share of alphabet in the third quarter was only 10.12 US dollars, lower than the previous analysts' average expectations. As a result, alphabet's shares fell $13.42, or 1.04%, to $1275.56 in after hours trading on NASDAQ.

Although the stock price has declined, alphabet's performance in the third quarter should focus on specific financial data.

Q3 financial report data list

The third quarter results of alphabet show that:

  • Total revenue was $40.499 billion, up 20% from $33.74 billion in the same period last year.

  • Net profit was $7068 million, down 23% from $9192 million in the same period last year.

  • Operating profit margin was 23% compared with 26% in the same period last year.

Alphabet's total cost and expenditure in the third quarter was $31322 million, up from $25115 million in the same period last year. Among them, revenue cost R & D expenditure, sales and marketing expenditure, general affairs and administrative expenditure are higher than the same period last year. As a result, it's not hard to understand that net profit has declined compared with the same period last year.

However, it is worth noting that alphabet's total revenue in the third quarter exceeded analysts' expectations. According to data provided by Yahoo Finance, 32 analysts had expected alphabet's third quarter revenue to be $40.32 billion, while the actual total revenue of alphabet Q3 was $40.499 billion.

From the perspective of business section, Google business is still in the core position. From the financial data, we can see that the total revenue of Google Q3 is 40.344 billion US dollars, 20% higher than that of 33.594 billion US dollars in the same period last year, accounting for 99.6%. Alphabet's other businesses generated $155 million in revenue in the third quarter, up from $146 million in the same period last year.

Regarding alphabet's third quarter performance, Google CEO Sundar Pichai said:

I'm very pleased with our overall progress in the third quarter, from our recent progress in search and quantum computing to our strong revenue growth driven by mobile search, youtube and cloud computing. We are focused on providing the most helpful services to our users and partners, and we see many opportunities in the future.

In addition, Ruth Porat, alphabet and Google CFO, also affirmed alphabet's third quarter results. She also noted that investment in talent and infrastructure will continue to support growth in newer areas such as cloud and machine learning.

Actively promote cloud business

From Google's source of income, advertising revenue is still the main source of income. According to financial data, Google's advertising revenue (composed of website revenue and network revenue) in the third quarter was $33.916 billion, up 17% from $28.954 billion in the same period last year, accounting for 84%.

Notably, other income (including pixelMobile phoneHardware and cloud products) grew 39% in the third quarter to $6.43 billion. Although Google didn't indicate the specific revenue of hardware products and cloud products in other revenue, the latest hardware launch from Google was held in October, so Google's other revenue in the third quarter mainly focused on cloud product revenue.

In addition, it can be seen from the large growth of other revenue that Google is actively working on hardware and cloud products in addition to advertising revenue to seek new growth points beyond advertising revenue.

In fact, Google has been actively seeking change, as Sundar Pichai said in the conference call - "we have evolved from a company that helps people find answers to a company that helps people complete tasks"; and the cloud business may be Google's biggest opportunity.

In a conference call, Ruth Porat said the company added 6450 new employees in the third quarter. In response, she explained that the "abnormally high" number of employees in the current quarter was due to cloud's recruitment strategy and the influx of new college graduates. At the same time, Ruth Porat also said in the financial report that he would continue to invest in talents and infrastructure to support the growth of new areas such as cloud and machine learning.

It is worth mentioning that Sundar Pichai also said in the conference call that the cloud business may be the biggest beneficiary of quantum computing milestone announced recently.

Antitrust investigation may bring uncertainty

For Google in the third quarter, the U.S. Department of justice may launch an anti-monopoly investigation on Google is a focus that cannot be ignored; after all, Google was fined 1.49 billion euros (about 1.69 billion US dollars, 11.3 billion yuan) by the European Union in the first quarter, which affected the net profit of Q1 financial report.

Before that, Google had admitted that it was the subject of anti competition investigations by US regulators, and would face investigations into corporate competition by the US Congress, the Department of justice and 48 states. Faced with the government's regulatory investigation, Sundar Pichai said in a conference call that Google will continue to expand its products and services to consumers and businesses. In addition, Ruth Porat pointed out that:

We have always shown that our business is designed and operated to benefit our customers. When we see that many of our products and services are free to users, which benefits consumers, small businesses and advertisers... We help reduce prices, provide more choices for consumers and businesses in the United States and around the world, and create new competition in many areas.

Faced with increased government regulation, Haris Anwar, an analyst at investment.com, said that while large technology companies were being investigated for their business conduct, alphabet's earnings fell, adding uncertainty and bringing a sense of sadness to the company.

summary

On the whole, alphabet still delivered a good report card in the third quarter, and its business outside of advertising also has a relatively significant harvest. However, in the face of the anti-monopoly investigation by US regulators, although the financial data has not been affected, Google should deal with it properly as soon as possible from the perspective of stabilizing investors.

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