GOOG Q4 2018 Earnings

Call Details

• Call Title: Alphabet Inc. Q4 2018 Earnings Call
• Date: February 4, 2019 at 9:30 PM UTC
• Management Team:
  • Ellen West (Head of Investor Relations)
  • Ruth Porat (Chief Financial Officer)
  • Sundar Pichai (Chief Executive Officer)

Call Summary

Financial Performance

• Alphabet reported total revenues of $39.3B for Q4 2018, up 22% year-on-year and up 23% in constant currency.
• Total revenues for full year 2018 were $136.8B, up 23% versus 2017.
• Consolidated total cost of revenues was $17.9B for the quarter, up 26% year-on-year, and other cost of revenues was $10.5B, up 34% year-on-year.
• Total traffic acquisition costs (TAC) were $7.4B in Q4, or 23% of total advertising revenues, and TAC was up 15% year-on-year.
• Consolidated operating expenses were $13.2B for Q4, up 27% year-on-year, with stock-based compensation of $2.3B and headcount of 98,771 at quarter end.
• Operating income was $8.2B for the quarter, up 7% year-on-year, for a consolidated operating margin of 21%.
• Net income for Q4 was $8.9B, with diluted earnings per share of $12.77 and an effective tax rate of 11.2% for the quarter.
• Google segment revenues were $39.1B in Q4, up 22% year-on-year, with Google Sites revenues of $27.0B up 22%, Network revenues of $5.6B up 12%, and Other Google revenues of $6.5B up 31%.

Guidance

• The company expects a headwind to reported versus constant currency results in Q1 2019 driven by continued strengthening of the U.S. dollar versus Q1 2018.
• The sites TAC rate is expected to continue to increase year-on-year, reflecting ongoing strength in mobile search.
• Headcount growth will continue but the year-on-year growth rate of headcount is expected to moderate in 2019.
• The pace of year-on-year CapEx growth is expected to moderate quite significantly in 2019 relative to 2018.
• Timing of product changes, particularly in search advertising, can vary and those timing differences can impact quarterly year-on-year revenue growth.
• No specific numeric revenue or EPS targets were provided on the call outside of high-level directional comments.