Alphabet Inc. Q3 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

Alphabet Q3 2022 Earnings Summary

Overview

  • Q3 revenue was 69.1 billion dollars, up 6 percent year-over-year or 11 percent in constant currency, showing continued growth despite substantial foreign exchange headwinds.
  • Operating income declined 19 percent year-over-year to 17.1 billion dollars, reflecting higher operating expenses and tough comparisons with strong 2021 results.
  • Net income was 13.9 billion dollars; free cash flow for the trailing 12 months was 63 billion dollars.
  • Headcount increased by 12,765 in Q3 (including 2,600 from the Mandiant acquisition). Q4 hiring will be less than half of Q3, with further moderation planned for 2023.

Google Services Performance

  • Google Services revenue was 61.4 billion dollars, up 2 percent year-over-year.
  • Search and other advertising revenue was 39.5 billion dollars, up 4 percent year-over-year. Growth decelerated mainly due to exceptionally strong 2021 comparisons and selective advertiser pullbacks (notably in financial services).
  • YouTube advertising revenue declined 2 percent year-over-year to 7.1 billion dollars. Advertiser pullbacks intensified from Q2, and growth is also pressured by rising Shorts consumption, which monetizes at a lower rate than long‑form video.

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Jim Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet’s third quarter 2022 earnings conference call. With us today are Sundar Pichai, Philipp Schindler and Ruth Porat. Now, I’ll quickly cover the safe harbor. Some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC as updated in our Form 10-Q for the quarter ended September 30, 2022, expected to be filed with the SEC later today. During this call, we’ll present both, GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today’s earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. And now, I’ll turn the call over to Sundar. Sundar Pichai: Thank you, Jim, and good afternoon, everyone. Our financial results for the third quarter reflect healthy fundamental growth in Search and momentum in Cloud. Our reported results reflect the effect of foreign exchange. The growth in our advertising revenues was also impacted by lapping last year’s elevated growth levels and the challenging macro climate. We are sharpening our focus on a clear set of product and business priorities. Th

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