GOOG: Alphabet's Q3 2023 Earnings Report: Key Takeaways

26 Okt 2023

Alphabet's Q3 2023 Earnings Report: Key Takeaways

Alphabet, the parent company of Google, recently released its Q3 2023 earnings report, and while the tech giant exceeded revenue and earnings expectations, the market's reaction was mixed due to concerns over Google Cloud's slower growth. Here are the key takeaways from the report:

Revenue Growth of 11%: Alphabet reported net sales of $76.7 billion, an 11% increase compared to the previous year. The growth was driven by improvements in the Search and YouTube segments, as well as the momentum in the Cloud division.

YouTube's Strong Performance: YouTube's ad revenue grew by 12% in Q3, rebounding from previous challenges. The platform faced increased competition from TikTok in recent quarters.

Google Cloud's Performance: Google Cloud reported $8.4 billion in revenue, slightly below Wall Street's expectations of $8.6 billion. While still growing, the year-over-year revenue growth rate slowed to 22% in Q3 from 28% in the previous quarters, raising concerns among investors.

Operating Income Soared by 25%: Operating income increased by 25% year-over-year to $21.3 billion, with an operating margin of 28%, up from 25% in the same period last year. This was attributed to cost savings resulting from workforce reduction efforts.

Google Services: The segment, including the core ad business and Google Other (hardware), generated an operating profit of $23.9 billion, up 27% year-over-year. Google DeepMind's transition from Google Services positively impacted this segment.

Google Cloud's Turnaround: Google Cloud reported an operating profit of $226 million, a significant turnaround from the $440 million loss in the same period the previous year.

Other Bets Segment: This segment reported an operating loss of $1.2 billion, 2.5% wider than the year-ago quarter.

Earnings per Share (EPS) Surged by 46%: Net income reached $19.7 billion, or $1.55 per share, a 46% increase from the previous year, exceeding Wall Street's EPS expectations of $1.36.

Operating Cash Flow Grew by 31%: Alphabet generated $30.7 billion in cash from its operations during the quarter, a 31% increase from the same period the previous year.

While there are concerns about the deceleration in Google Cloud's revenue growth, it's important to note that assessing a business over just a few quarters is a relatively short timeframe for long-term investors. Alphabet's strong financial performance and continued growth in various segments indicate the company's resilience in the face of evolving market dynamics.