
Alphabet Announces Second Quarter 2018 Results [pdf] - take4
https://abc.xyz/investor/pdf/2018Q2_alphabet_earnings_release.pdf
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MarkMc
26% revenue growth for such a large company is astounding. Google's growth
machine seems to have lasted much longer than people expected.

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panarky
26% is a crazy high growth rate for a company with 89,000 employees.

Even more amazing is that it's actually accelerating:

Q2 2018 vs. 2017 +26%

Q2 2017 vs. 2016 +21%

Q2 2016 vs. 2015 +21%

Q2 2015 vs. 2014 +11%

Q2 2014 vs. 2013 +21%

Q2 2013 vs. 2012 +11%

I don't think I've ever seen this with another big company.

Truly astounding.

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tim333
I guess maybe the restructuring from Google to Alphabet worked. The idea was
based on Berkshire Hathaway, another company with unusual growth.
([http://www.berkshirehathaway.com/letters/2017ltr.pdf](http://www.berkshirehathaway.com/letters/2017ltr.pdf))

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notatoad
that seems like a strange conclusion, since a huge majority of the revenue and
growth is still coming from Google.

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tim333
I think one of the advantages of that structure is the head of Google now just
focuses on Google instead of trying to think about a dozen other businesses as
well.

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Cthulhu_
Indeed, focus is a great thing. Although weirdly enough, Android is still part
of Google as well; you'd think that'd be a prime candidate to move alongside
Google as its own venture.

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RugnirViking
The idea may be that android benefits a lot more from integration with other
google products. Although I'm not sure on how inter-alphabet cooperation is
going.

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philipodonnell
Revenue up 26% YOY (good but expected). Big one for me is advertising segment
revenue as % of total segment revenue, down to 86.3% from 87.4%, which is
good, they have got to diversify away from ads eventually.

Disappointing to see the "other bets" still at a paltry $145M and losses are
growing faster. Also no mentioned whatsoever of cloud performance. Employee
count up 15% but < NI growth. (does anyone know if this includes temporary
staffing for things like streetview drivers?)

Wow, that was a big fine though.

~~~
lazharichir
As a user of GCP, they are moving with new useful products every few weeks.
And it's a lot clearer as an offering than the top competitor. Perhaps fewer
settings, but much easier to get your head around it. A lot of developers use
it as a go-to, let's see how companies react over the next years.

And Google Cloud Next '18 from tomorrow, so surely few announcements to come.

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mathattack
Are you an individual user or corporate? Their reputation for large
enterprises has been not enough handholding to accompany the complexity.
(Relative to IBM/AWS/Oracle) I’m curious about your experience.

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topicseed
Both, but small company. But I agree with you, although thry are slowly
attracting very large accounts — thanks to discounts surely, but at least they
get some names, which will get some names as ROI. Well worth the huge
discounts, if it all pans out.

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mathattack
I assume over the long haul they will be the low cost producer. They need to
learn to sell and support in a higher touch manner to bring in the large
corporates.

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karpodiem
This is why Azure is outpacing AWS/GCE.

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relaunched
Microsoft's Enterprise sales force is second to none and they are clearly the
number 2 in the cloud space. However, shifting office365 (a SAAS offering) to
be reported as cloud revenue is disingenuous.

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ksec
I wouldn't say second to none as Oracle's Enterprise sales force are better,
and likely much better rewarded.

However if you combine the whole package, from sales, product, after sales
services, etc. Microsoft is so far ahead of AWS, and Google doesn't know
anything about human interaction / Sales.

~~~
relaunched
I'll give you that.

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JumpCrisscross
Had to chuckle at their breaking out earnings into "including fines" and
"excluding fines" categories.

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jacques_chester
It's intended to show an underlying trend of continued growth. That's the
story they want Wall St to absorb.

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JumpCrisscross
> _an underlying trend of continued growth_

I understand the reasoning, and frankly agree with it. It's just funny. I
don't remember banks, post-crisis, breaking their numbers out so overtly.
Usually it was "less one-time charges" or something similarly circuitous.

~~~
jacques_chester
This is sort of why GAAP and IFRS are constantly-evolving reporting standards:
companies always want to present the best-possible version of events and
investors always want to know the bad news.

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gravity_123
Every quarter they hire ~4000 employees, majority of them engineers and
product managers. In q3 they expect even more due to new grads joining. Does
anyone know how this looks compared to other big companies like
amazon,microsoft,facebook, etc?

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mrep
Amazon, Microsoft, and Google have all been hiring crazy amounts of people for
the cloud as it is growing so fast.

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lazharichir
Strong headcount growth versus other FANG-like companies.

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olliej
Dumb question I’m too lazy to effectively google: what is FANG? (Assuming
we’re not talking vampires)

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dlp211
Facebook, Amazon, Netflix, Google. It's a shorthand for high growth tech
stocks. It is also sometimes abbreviated FAANG to include Apple, and sometimes
it will include Microsoft.

It's best, IMO, to think of it as the BIG10 NCAA division, the name only
represents a subset of its membership.

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TheGRS
Big 6 wouldn't be a bad name for this group, most people would probably know
who you're talking about. Unless people are going for some sort of double-
entendre with the name FANG.

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Bucephalus355
Seems reasonable. All the big oil companies used to be called “the 7 sisters”
(before mergers) and then back in the 70’s for accounting it was “the big 8”.

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tequila_shot
Honest question: First time reading quarter results. How do I interpret these
results?

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jacques_chester
Revenue: sales recorded.

This might or might not represent cash coming through the door in this
quarter, but it represents that there is an agreement for cash and
goods/services to change hands.

Operating income:

Money left over after you subtract the costs of operating the business and
making the sale. In a manufacturing firm, for example, you would subtract the
cost of the materials in the goods sold. For Google they are deducting things
like the running costs of data centres and wages for staff.

Operating margin:

You can think of this as raw profitability. Given the things management has
direct, somewhat immediate control over, how good is the company at taking in
more money than they spend?

Net income:

Take the Operating Income and then subtract taxes, interest payments,
depreciation of assets and the like. These are all expenses, but not expenses
directly connected to current activities.

In the rest of the figures they give metrics that are intended to help
analysts understand the dynamics of the business that lead to the financials.
So for example they showed how different categories contribute to the bottom
line. They also show headcount, which can be seen as a leading signal of
intention and ability to grow the business. That operating income has grown
even with a very large headcount growth is impressive.

\----

I am not a lawyer, accountant or financial advisor, don't rely on this as
professional or investment advice.

~~~
fermienrico
I’ve always wondered this - why do internet comments have to explicitly say
“I’m not a lawyer and this is not a legal advice”?

I think that it’s pretty obvious and needless. What’s the consequence of not
having a disclaimer? Internet has a lot of noise and it is the responsibility
of the reader. I never understood why people have to say this.

Same goes for “I am not a Doctor”.

Are there any legal ramifications to:

A) Comment has legal terminology and kind of sounds like legal advice but has
no disclaimer.

B) What if someone falsefully claims they’re a Lawyer and puts out a comment
on the internet?

I am bothered by this since the dawn of the internet and never understood it.

~~~
jacques_chester
For a few years I studied law. The first lecture was, essentially: "You are
not lawyers. Do not give legal advice. Do not claim to know anything. You are
not lawyers".

Since I dropped out, I am doubly not a lawyer.

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lgleason
Interesting. If you look at the Operating income with fines they are actually
down from last year. If you look at it without fines it's 14% growth...

Given the increased scrutiny and the regulatory headwinds I think the with
fines is probably a more accurate number. If you want to split it you could
call it stagnant.

They are hiring a lot of people, but from from I've heard and seen the hiring
standards have been reduced from what they used to be. A lot of the spending
is to make Wall Street think they have something beyond search but it is still
the cash cow the keeps it going...

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ironfootnz
Such an amazing grown rate. I'm speechless.

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tozeur
$5B in EU fines. Ouch.

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samfisher83
It hurt, but they still made 3 bil. If they have to pay 5 billion once a year
to ensure they have a monopoly I don't that that is a bad trade for them.

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adventured
Particularly with a 20%+ growth rate and their pile of cash. An annual $5
billion EU envy tax is already meaningless. The EU can't stop the US tech
machine from continuing to expand, it's already too late. While they focus on
fines and hold a defensive posture, the US companies are consuming the planet
ex China.

~~~
pineaux
It's still very possible for nations to block out companies. China does it
with great succes and as a result they have created their own safe hatchery
for applications and hardware to grow strong before jumping into the global
market, which is just 6x bigger anyway...

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module0000
Alphabet earnings caused all-time-highs to be set(again) on the NQ immediately
upon their release. The Nasdaq is in defying-reality territory currently.
Exciting times for futures traders.

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MaysonL
Interestingly, they found it necessary to present income with and without
including 2017's $2.7B and 2018's $5B in fines.

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theDoug
Not speaking for my employer, and only an highly amateur accountant.

I believe this is done because the appeals process is not yet final. As to
whether they "found it necessary," it may be a requirement, or to frame
expectations into future quarters when inevitably these numbers finally
persist or reverse.

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megaremote
Well, they always highlight one off charges, it is very common.

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ChuckMcM
Anyone else notice that both the operating margin was down 2 points and other
bets capex was down 10x?

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puzzle
Nest now being part of Google might explain the latter? If that's the case,
one wonders where all the new revenue for Other bets comes from.

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mooreds
Would love to have seen the breakout between different types of advertising.

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todipa
Fines are becoming a common expense, they should list them as a cost of doing
business.

They aren't tax deductible for US purposes so you are taxed on pre-fine
income.

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projektfu
Perhaps they should take a quarterly charge in anticipation of future fines.

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mudil
Mass surveillance of billions of people pays off handsomely.

Google and Facebook are the only two businesses that prosper on ads, while
your local newspapers, specialized websites, and journalism in general are
dying.

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sctb
You've been posting mainly inflammatory comments about Google and Facebook.
Could you please try switching it up?

> _Please don 't use Hacker News primarily for political or ideological
> battle. This destroys intellectual curiosity, so we ban accounts that do
> it._

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

~~~
mudil
Serious question. How is it that Google makes billions of dollars on ads and
newspapers that depend on ads are suffering?

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Jyaif
Because depending on ads to pay journalists is a crappy business. Ads are
worth it if the content with the ads is super cheap to generate (e.g. search
result pages, or user generated content)

