GOOG Q4 2019 Earnings

Call Details

• Call Title: Alphabet Inc. Q4 2019 Earnings Call
• Date: February 3, 2020 at 10:00 PM UTC
• Management Team:
  • Ellen West (Head of Investor Relations)
  • Sundar Pichai (Chief Executive Officer)
  • Ruth Porat (Chief Financial Officer)

Call Summary

Financial Performance

• Alphabet reported total 2019 revenues of $162B, up 18% year-on-year and up 20% in constant currency.
• Fourth quarter consolidated revenues were $46.1B, up 17% year-on-year and up 19% in constant currency.
• Google segment revenues for Q4 were $45.8B, up 17% year-on-year on a GAAP floating FX basis.
• YouTube advertising revenues were $4.7B in Q4, up 31% year-on-year, and YouTube ads totaled $15B for 2019, up 36% versus 2018.
• Google Cloud revenues were $2.6B in Q4, up 53% year-on-year, and Google Cloud exited 2019 at a greater than $10B annual run rate.
• Consolidated operating income was $9.3B in Q4 for a 20% operating margin, and consolidated net income was $10.7B with diluted EPS of $15.35.
• Traffic acquisition costs were $8.5B in the quarter, representing 22% of total advertising revenues and up 14% year-on-year.

Guidance

• The company expects continued FX headwinds in Q1 2020 driven by the stronger U.S. dollar versus the first quarter of last year.
• Ruth Porat stated that Alphabet will increase technical infrastructure and office facilities CapEx in 2020 versus 2019, with relatively more spend on servers than on data center construction.
• Management stated that headcount growth is expected to be slightly higher in 2020 due to investments in priority areas and the planned impact of the Fitbit acquisition.
• The company reiterated an aggressive investment posture for Google Cloud and said it will continue to expand go-to-market capabilities and global footprint.
• Ruth warned that effective tax rate can vary quarter-to-quarter and noted Q4 ETR was 0.3% while full-year 2019 ETR was 13%.
• There was no numeric margin guidance provided for Google Cloud or Other Bets on the call, and the company declined to provide granular margin forecasting for GCP.