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Alphabet (GOOGL) Q1 Earnings Beat Estimates, Revenues Up Y/Y
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Alphabet’s (GOOGL - Free Report) first-quarter 2032 earnings of $1.17 per share beat the Zacks Consensus Estimate by 10.4%. The figure declined by 4.9% year over year.
Revenues of $69.8 billion increased 3% year over year (6% at constant currency).
Net revenues, excluding total traffic acquisition costs or TAC (the portion of revenues shared with Google’s partners and amounts paid to distribution partners and others who direct traffic to the Google website), were $58.1 billion, which surpassed the consensus mark of $57.2 billion. The figure rose 3.7% from the year-ago quarter’s level.
TAC of $11.7 billion was down 2.2% year over year.
Top-line growth was driven by the solid momentum in GOOGL’s cloud business and improvements in Search performance.
Alphabet witnessed sluggishness in YouTube ads and Google Network ads due to a slowdown in digital advertisement spending. This remained a major concern. Also, softness in the Other Bets segment was a downside.
Alphabet’s growing investments in AI, strong efforts to boost Search business and expanding cloud services portfolio, which is expected to yield huge returns in the days ahead, remain major positives. This, in turn, is expected to instill investor optimism in the stock in the days ahead.
The company has announced a massive $70 billion share repurchase plan. This remains a major positive.
Alphabet has gained 22.2% in the year-to-date period, outperforming the industry’s growth of 19.3%.
Alphabet reports revenues under Google Services, Google Cloud and Other Bets.
Google Services:
Revenues from the Google Services business increased 0.8% year over year to $61.96 billion, accounting for 88.8% of the total revenues.
Under this business, search revenues from Google-owned sites increased 1.9% year over year to $40.36 billion.
YouTube’s advertising revenues declined 2.6% year over year to $6.7 billion, while Network advertising revenues decreased 8.3% to $7.5 billion.
Total Google advertising revenues fell 0.2% year over year to $54.5 billion and accounted for 78.2% of the total revenues.
Google’s Other revenues, consisting of Google Play and YouTube non-advertising revenues, were $7.4 billion for the first quarter, up 8.8% year over year.
Google Cloud:
Google Cloud revenues rose 28% year over year to $7.45 billion, accounting for 10.7% of the quarter’s total revenues.
Other Bets:
Other Bets’ revenues were $288 million, down 34.5% year over year and accounted for 0.4% of the total first-quarter revenues.
Regional Details
EMEA (30.2% of total revenues): GOOGL generated $21.1 billion in revenues from the region, increasing 4% year over year.
APAC (16.7% of total revenues): The region generated $11.7 billion in revenues, down 1% from the year-ago quarter’s level.
Other Americas (5.8% of total revenues): The region generated $4.1 billion in revenues, up 6% on a year-over-year basis.
United States (47.1% of total revenues): Alphabet generated $32.9 billion in revenues from the region, which increased 4% from the prior-year quarter’s level.
Operating Details
Costs and operating expenses were $52.4 billion, up 9.3% year over year. As a percentage of revenues, the figure expanded 459 basis points (bps) from the year-ago quarter’s level.
The operating margin was 24.9%, which contracted 460 bps year over year. Segment-wise, Google Services’ operating margin of 35.1% contracted 60 bps from the prior-year quarter’s level.
Google Cloud reported operating income of $191 million compared with a loss of $706 million in the year-ago quarter.
Other Bets reported a loss of $1.2 billion compared with a loss of $835 million in the prior-year quarter.
Balance Sheet
As of Mar 31, 2023, cash and cash equivalents and marketable securities were $115.1 billion, up from $113.8 billion as of Dec 31, 2022.
Long-term debt was $13.7 billion at the end of the reported quarter compared with $14.7 billion at the end of the previous quarter.
Alphabet generated $23.5 billion of cash from operations in first-quarter 2023 compared with $23.6 billion in fourth-quarter 2022.
GOOGL spent $6.3 billion on capex, netting a free cash flow of $17.2 billion in the reported quarter.
Zacks Rank & Stocks to Consider
Currently, Alphabet has a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector may consider some better-ranked stocks like Salesforce (CRM - Free Report) , Arista Networks (ANET - Free Report) and Analog Devices (ADI - Free Report) . While Salesforce sports a Zacks Rank #1 (Strong Buy), Arista Networks and Analog Devices carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce’s shares have risen 43.8% in the year-to-date period. CRM’s long-term earnings growth rate is currently anticipated to be 16.75%.
Arista Networks’ shares have risen 26.5% in the year-to-date period. ANET’s long-term earnings growth rate is currently projected to be 14.17%.
Analog Devices’ shares have gained 10.5% in the year-to-date period. ADI’s long-term earnings growth rate is currently expected to be 10.5%.
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Alphabet (GOOGL) Q1 Earnings Beat Estimates, Revenues Up Y/Y
Alphabet’s (GOOGL - Free Report) first-quarter 2032 earnings of $1.17 per share beat the Zacks Consensus Estimate by 10.4%. The figure declined by 4.9% year over year.
Revenues of $69.8 billion increased 3% year over year (6% at constant currency).
Net revenues, excluding total traffic acquisition costs or TAC (the portion of revenues shared with Google’s partners and amounts paid to distribution partners and others who direct traffic to the Google website), were $58.1 billion, which surpassed the consensus mark of $57.2 billion. The figure rose 3.7% from the year-ago quarter’s level.
TAC of $11.7 billion was down 2.2% year over year.
Top-line growth was driven by the solid momentum in GOOGL’s cloud business and improvements in Search performance.
Alphabet witnessed sluggishness in YouTube ads and Google Network ads due to a slowdown in digital advertisement spending. This remained a major concern. Also, softness in the Other Bets segment was a downside.
Alphabet’s growing investments in AI, strong efforts to boost Search business and expanding cloud services portfolio, which is expected to yield huge returns in the days ahead, remain major positives. This, in turn, is expected to instill investor optimism in the stock in the days ahead.
The company has announced a massive $70 billion share repurchase plan. This remains a major positive.
Alphabet has gained 22.2% in the year-to-date period, outperforming the industry’s growth of 19.3%.
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 0.8% year over year to $61.96 billion, accounting for 88.8% of the total revenues.
Under this business, search revenues from Google-owned sites increased 1.9% year over year to $40.36 billion.
YouTube’s advertising revenues declined 2.6% year over year to $6.7 billion, while Network advertising revenues decreased 8.3% to $7.5 billion.
Total Google advertising revenues fell 0.2% year over year to $54.5 billion and accounted for 78.2% of the total revenues.
Google’s Other revenues, consisting of Google Play and YouTube non-advertising revenues, were $7.4 billion for the first quarter, up 8.8% year over year.
Google Cloud:
Google Cloud revenues rose 28% year over year to $7.45 billion, accounting for 10.7% of the quarter’s total revenues.
Other Bets:
Other Bets’ revenues were $288 million, down 34.5% year over year and accounted for 0.4% of the total first-quarter revenues.
Regional Details
EMEA (30.2% of total revenues): GOOGL generated $21.1 billion in revenues from the region, increasing 4% year over year.
APAC (16.7% of total revenues): The region generated $11.7 billion in revenues, down 1% from the year-ago quarter’s level.
Other Americas (5.8% of total revenues): The region generated $4.1 billion in revenues, up 6% on a year-over-year basis.
United States (47.1% of total revenues): Alphabet generated $32.9 billion in revenues from the region, which increased 4% from the prior-year quarter’s level.
Operating Details
Costs and operating expenses were $52.4 billion, up 9.3% year over year. As a percentage of revenues, the figure expanded 459 basis points (bps) from the year-ago quarter’s level.
The operating margin was 24.9%, which contracted 460 bps year over year. Segment-wise, Google Services’ operating margin of 35.1% contracted 60 bps from the prior-year quarter’s level.
Google Cloud reported operating income of $191 million compared with a loss of $706 million in the year-ago quarter.
Other Bets reported a loss of $1.2 billion compared with a loss of $835 million in the prior-year quarter.
Balance Sheet
As of Mar 31, 2023, cash and cash equivalents and marketable securities were $115.1 billion, up from $113.8 billion as of Dec 31, 2022.
Long-term debt was $13.7 billion at the end of the reported quarter compared with $14.7 billion at the end of the previous quarter.
Alphabet generated $23.5 billion of cash from operations in first-quarter 2023 compared with $23.6 billion in fourth-quarter 2022.
GOOGL spent $6.3 billion on capex, netting a free cash flow of $17.2 billion in the reported quarter.
Zacks Rank & Stocks to Consider
Currently, Alphabet has a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector may consider some better-ranked stocks like Salesforce (CRM - Free Report) , Arista Networks (ANET - Free Report) and Analog Devices (ADI - Free Report) . While Salesforce sports a Zacks Rank #1 (Strong Buy), Arista Networks and Analog Devices carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce’s shares have risen 43.8% in the year-to-date period. CRM’s long-term earnings growth rate is currently anticipated to be 16.75%.
Arista Networks’ shares have risen 26.5% in the year-to-date period. ANET’s long-term earnings growth rate is currently projected to be 14.17%.
Analog Devices’ shares have gained 10.5% in the year-to-date period. ADI’s long-term earnings growth rate is currently expected to be 10.5%.