Comment by chollida1 | Hacker News Reader

Comment by chollida1 | Hacker News Reader

Numbers:

- Q1 EPS $1.21 vs EST $1.32

- Q2 Rev. of $70B vs est of $70B

- Ad Rev. $56.3B vs EST of $56B, grew 12% on the year, good job!! but growth is way down from last year.

- this add revenue is good, which indicates they aren't really affected by the Iphone privacy changes like META is.

- operating margin came in at estimates

- cloud lost $858M which is higher than expected

- cloud Rev was 6.2B which is about what was expected

- Other Bets lost $1.7B, which is small enough no one will care

- other best revenue is $190M

- stock is down about 24%, wich is a beta of almost 1, maybe googles growth is done and its becoming a typical old boring stock that just makes money now

To Watch:

- all advertising is slowing, Twitter, Snap and Pins are all below their IPO price and META is down big, whatch for GOOG advertising, though normally you'd expect search advertising to be more resistant

- watch youtube add numbers, it really seems like they are playing alot more adds, normally I see 2 before each video now

- will google cloud start to approach the big 2 of azure and aws

- will they talk about hiring or layoffs

Notes:

- add revenue held up ok, compared to peers

- other bets continues to not matter, at some point waymo has to put up or get shut down

- will cash on hand grow or shrink? Looks like its down by about $10B

- cloud unit disappoints with revenue

- shares relatively flat after hours( up maybe 2%), probably a good trade to buy their peers now(snap, pins, etc, meta)

- whoever runs Google cloud must have blackmail material on Pichai, AWS and MSFT run big profitable operating margins and google cloud is losing money, this is something they should be good at, but they are somehow the only one that has figure dout how to lose money on what is a cash cow for the big 2.

What is going on with their cloud offering??

- zero hedge tweet that they've repurchased $15B of stock

> stock is down about 24%

I thought you meant it had massively crashed on this earnings

It's down ~24% YTD (along with basically every other stock).

Up ~2% after hours on this earnings report

I don't think Waymo will contribute meaningfully to the bottom line for at least another 3/4 years, however people had the same mentality of "put up or get shut down" regarding YouTube a few years ago, and we all know how that turned out. That said, I'm still very bullish on both the stock and Waymo specifically.

Waymo won't contribute meaningfully for at least 2 decades. Bottom line = profit. Top line = revenue.

Adding more ads and bringing down video serving costs are tangible, achievable goals. Solving self driving is not. I honestly don't think Google has the right culture to deliver either. There's no hunger to win there.

I'm not sure self driving is a matter of Google culture. It's just become pretty evident that, while maybe some limited fully self-driving use cases will become viable in the next decade or two, this idea that you can have your personal chauffeur whisk you door to door even in an urban environment perhaps in your lifetime so you never need to own a car is not happening. And that really disappoints some people who bought into the idea.

I certainly hope AGI happens in my lifetime.

1. I doubt it

2. Be careful what you wish for

You do realize that people are being whisked door to door in an urban environment today, right? And not just by Waymo but Cruise as well. Sure it's small scale at the moment and not available to the average person, but it's happening.

Waymo isn't part of Google though, it's a separate company owned by the Alphabet holding corporation. The other bets within Alphabet do have cultures that are different from Google.

Anyway, I think Waymo is doing much better at this than the rest of the competition. If not Waymo then who? Uber's approach was much worse, and got canceled.

Why is cloud a loss for Google but a cash cow for Amazon?

Lots of capex

Because Google is playing catch up and needs to pay higher salaries to poach from MSFT and AMZN and also pay much more for infra than what Amazon paid for theirs initially.

Google has been "playing catch up" for a decade now. They also pay less than Amazon (source levels.fyi)

From what I hear they paw software engineers less, but find it harder to attract sales personnel, as it’s easier to sell the industry leader (IBM, Oracle vs ???). No sources, just some posts a few months ago.

Google does not pay less than Amazon (source levels.fyi https://www.levels.fyi/?compare=Amazon,Google,Salesforce&tra...).

I have heard people claim that Amazon pays more and by that they mean that if you hold your Amazon stock until vesting, it appreciates so much that it ends up being worth more than whatever the Google grant would have been worth. But then you have to ask if the relative performance of the stocks will remain stable over time despite having changed recently, and factor in differences in employee churn and so on.

They pay about 100,000 less. Its widely known, not sure why you are arguing this. Amazon also raised their paybands massively, so a blanket comparison doesnt reflect reality. Look at individual data over the last year or so. Google also downlevels, so comparing levels makes less sense, compare years of experience instead

Back last July, AWS couldn’t come close to what Meta or Google could offer when I was looking.

> Amazon also raised their paybands massively

that $350k base limit is top of the band, not everyone walking inside the door is going to get that. A friend of mind got an offer from AWS about a month ago, his base was offered $180k

Very wrong.

What does Google still need to catch up on in cloud? Building products/services? Sales? AFAIK, they have comparable cloud services to most AWS/Azure offerings.

Trust for one thing. They just cut off customers services with line of recourse. Also shut down products with little warning.

I don't think shutting down products applies to GCP services. Even if it did, it doesn't explain the $858M loss. They are spending big on something to "catch up", I'm just not sure what it is.

IIRC it's mostly incentives for large companies to jump ship

> shutting down products applies to GCP services

they regularly deprecate old API versions in favour of new ones, which are not backwards compatible and usually more expensive

any time Google Cloud APIs change you have to update your code

and they break stuff, introduce bugs more often that you'd expect and prioritize new features over fixes (see bugtracker for confirmation)

this is why i'm never again touching GCP

Mostly I think it’s just acquiring customers. The big cloud providers go to great lengths to lock their customers in, so convincing them to switch is hard. Requires a much better product which seems pretty much impossible against aws and azure or a much cheaper price.

From someone who does enterprise technical sales for a B2B company: Identity Management is a major area of concern for GCP / GSuite, at least in the enterprise space, especially for the low to moderately technical folks that I sell to. The same could be said for AWS but they have first mover advantage in many ways.

IIUC, Google w/o cloud or YouTube handles more network requests, storage, and bandwidth than Amazon + AWS by a large margin.

They don't need to "catch up" on infra. They need to catch up on their product offering.

They also offer insanely cheap deals to nonprofits and education for both GSuite (or whatever they call it these days) and GCP. Totally makes sense why they do it but I have to imagine its a huge loss on paper.

They also might be building more actual datacenters and doing so in a high end / environmentally friendly way whereas perhaps Amazon has already done a lot of those investments in previous years?

>… insanely cheap deals to nonprofits…

Amazon and Microsoft both do that as well.

Probably because Amazon is better at retail sales. For larger companies both Amazon and Google give an enormous amount of incentives to secure the accounts, so they have lower margins. Where they thrive is with smaller and medium businesses. Amazon is better at the market of selling to the average joe.

Microsoft is also good at upselling Azure through existing customer relationships, and almost every company is a Microsoft customer.

Sales also just isn't in Googles DNA.

It's an uphill battle for Google.

AWS was actually able to add enterprise sales after realizing it needed to. Not clearly Google has done nearly as good a job.

Google has a cash cow and isn't hungry. Their employees can half-arse the rest of their business and still be confident they'll get paid at the end of the week. Amazon's retail arm bled when AWS was started, and still bleeds. Success is a matter of urgency.

AWS early mover advantage?

This.

In medium sized companies no one cares how expensive is the cloud bill.

What matters is getting the infrastructure and any devop and many devs are already used to AWS so it is chosen by default.

Because Google is absolutely awful at Cloud and they have to subsidize heavily to attract customers.

Their cloud platform is fantastic if you're trying to stay on vanilla k8s and standard managed DBs without getting into vendor lock-in territory.

Their management UI is an order of magnitude better than AWS garbage. It's clean, informational, and easily navigable.

Spanner great, but I'm not using it for my startup.

Anyone who says using K8s on any cloud provider prevents “lock in” has never done a large scale migration.

You’re always “locked in” to your infrastructure at scale.

> Their management UI is an order of magnitude better than AWS garbage. It's clean, informational, and easily navigable.

I've never seen someone calling a glacially slow, inconsistent, cannot-even-display-graphs-90%-of-the-time, information-hidden-behind-multiple-steps abomination of GCP Console that.

A lot of the cost structure is ~fixed (and high). It's pretty much the ultimate scale game.

> at some point waymo has to put up or get shut down

obviously noone is expecting significant revenue there last quarter or any near future ones so it's pretty irrelevant how they do on quarterly reports. It's been over a decade and they seem to now be making serious progress. That "some point" isn't going to be this quarter or next quarter or sneak up by surprise on anybody

> - this add revenue is good, which indicates they aren't really affected by the Iphone privacy changes like META is.

ad density would be an interesting figure. YouTube is unwatchable with ads turned on.

Likely, google perceives that their cloud losses are about on par with what they’d lose on software/other expenses if they shut down gcp and continued in house with their infrastructure (rightly or wrongly).

Compared to other bets, the loss is not large compared to growth opportunity. however the absolute numbers in these losses are interesting in and of themselves. There are clearly extremely large divisions which produce negligible revenue, let alone profit.

Wasn’t the whole problem with Google Cloud that they did, in fact, not dogfood this and their internal infra is completely separated?

That sounds like the sorts of results that tend to hammer a company. Some barely beats on low expectations. A bunch of expectations barely or misses.

Main numbers are these:

--- start quote ---

- Q2 Rev. of $70B vs est of $70B

- Ad Rev. $56.3B

--- end quote ---

80% of revenue is advertising. That's all you need to know about the company's direction and incentives.

I would submit that knowing the trend of ad revs as a percentage of the whole would tell you more than a single snapshot, which has no direction itself.

That’s down from 97%+, the direction is more important than the current number since the change over time indicates how the company is evolving and it is obviously moving towards diversification.

It has been hovering around 80% for a few years now, hasn't it?

It's their cash cow. Why would they stop?

But that 20% isn't advertising is much better for Alphabet than compared to 10 years ago. Waymo is the next big bet.

Waymo isn't a bet. At least, isn't a bet that is projected to be even remotely cash positive, much less having a significant percentage in Alphabet's revenue, in any foreseeable future.

That’s not how I heard it was viewed internally a few year ago.

By who?

Nothing that’s public.

All these "north star goals" and "company bets" are often pipe dreams.

Waymo has been around for 13 years now. It's bet is to have full level 4 autonomy, at least. And that is another 20 years away in an optmistic scenario.

Well, unless you only drive on sunny days in a geofenced region in Arizona and call crashing into a bus "a misunderstanding and a learning experience".

Reply on news.ycombinator.com