Google (Alphabet) earnings report delivered good news on many levels. Google continues to show incredible strength with all three core segments showing growth.
Core Google search is seeing 44% operating margins, while Google Cloud is now an $18B annual business growing at 53% year over year.
At a $28B run rate, YouTube grew 83% year over year and I believe that it remains in the early days of monetization as per our conversations with large $1B+ ad agencies. Waymo and Verily are around and not even in our thinking, but have moonshot potential.
Here are some growth and margins highlights from Alphabet’s earnings release:
– $61B in sales, +61.6% year over year
– This is the strongest revenue growth in a decade.
– Google Cloud is growing rapidly.
– YouTube is still under-monetized with significant runway.
– YouTube + Google Cloud is a $46B annual run-rate business. This is 2 times the size of Visa.
– 31% operating margins – very strong!
– Core Google ex other bets is 44% margins – wow!
– Now showing 4 straight quarters of accelerating operating margins.
– $21B in operating cash flow.
Alphabet – A Longer Term View
Google has multiple layers of growth and little of this is priced into the asset as of yet. The company remains well-positioned within many of our Structural Growth Innovation Blocks. This includes the Future of Mobility, the Future of Computing, Digital Work, and Interactive Entertainment.
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