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Alphabet Q4 en FY 2023
#Alphabet
Markt niet tevreden met het nochtans goede rapport waarbij de omzet in het vierde kwartaal hoger was dan verwacht. Nabeurs -5%, op lager dan verwachte advertentieinkomsten en hogere verwachte kosten en investeringen in 2024. (al werd er tegelijkertijd aangekondigd dat er personeel afgevloeid zal worden). Positieve geluiden uit Cloud segment, dat door AI beter deed dan verwacht. Echter, het feit dat Azure van MSFT nog beter deed zal ook bijgedragen hebben aan daling nabeurs.
Omzet FY 2023 +9% tot $307 mia tov 2022. Q4 $86,3 mia (boven de lat. Er werd gerekend op $85.3) +13% jaar-over-jaar. Search nog steeds grootste bijdrager aan omzetgroei
(Alles in jaar-over-jaar)
Q4:
Operationele kosten 11% hoger tot $25 mia. Operationele winst $23.7 mia, +30%, marge 27%. EPS $1.64. FCF $7.9 mia. FY 2023 FCF $69 mia. $62 mia aan buybacks in 2023. $111 mia (!) in cash en effecten.
– In Google Services, omzet $76.3 mia, stijging van 12%. Google Search and other advertising omzet van $48 mia + 13%, aangedreven door groei in retail. YouTube advertenties omzet $9.2 mia +16%. Network advertising omzet $8.3 mia – 2%. (retail positief, maar gezamenlijk advertentie omzet kwam op $65.5 mia, iets onder de analistenverwachting van $66.1 mia, en een van de redenen van daling nabeurs. Stevige concurrentie van Facebook, Instagram, TikTok and Amazon.com. Vanavond Meta vergelijken op basis van addinkomsten)
Subscriptions, Platforms and Devices revenues, (wat eerder als other revenues werd gerapporteerd), $10.8 mia, +23%, voornamelijk door groei in YouTube abo’s. TAC (traffic acquisition costs) $14 mia, + 8%. Google Services operationele winst $26.7 mia, + 32%, operationele marge van 35%.
Cloud segment. Omzet Q4 $9.2 mia +26%. Ruth Porat CFO: We’re very pleased with the momentum of GCP with an increasing contribution from AI. Google Workspace also delivered strong revenue growth, primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $864 million and an operating margin of 9%. (Cloud beter dan verwacht door AI-boost, wat een opsteker is. Omzet $9.2 mia(+25.7%, maar tragere groei dan zelfde kwartaal vorig jaar)) tegenover $8.9 mia analistenverwachting. Echter, MSFT Azure groeide sneller in dezelfde periode)
Google is bringing a powerful suite of models called Gemini to its ChatGPT rival Bard. It also struck a deal to invest up to $2 mia in high-profile AI startup Anthropic as it courts customers from larger cloud rivals Microsoft and Amazon. And it is putting Gemini into advertisers’ hands to keep their dollars flowing to Google’s search business.
Other Bets FY 2023, omzet $1.5 mia, operationeel verlies van $4.1 mia.
Outlook:
Advertenties: Porat: We were pleased with the sequential revenue growth of Search and YouTube advertising throughout 2023, which reflects the extraordinary work across our teams to drive improved experiences for users and attractive ROI for advertisers. As we enter 2024 with advertising revenues of more than $100 billion higher than 2019, we remain focused on sustaining healthy growth on this larger base.
Subscriptions: Our total revenues from subscription products reached $15 billion for the full-year 2023, driven primarily by substantial growth in subscribers for our YouTube subscription offerings. The substantial increase in our subscription revenues over the past few years demonstrates the ability of our teams to deliver high value-add offerings and provides a strong base on which to build, including through YouTube and newer services like Google One.
Play had solid growth again in the fourth quarter, driven primarily by an increase in the number of buyers. In Devices, we continue to make sizable investments with increased emphasis on our Pixel family, particularly with AI-powered innovation while driving further efficiencies across the portfolio.
Google Cloud. We are pleased with operating performance in the year. Full year revenues of $33 billion were up 26% versus prior year, ending with strong Q4 performance. The Cloud team is intensely focused on bringing the benefits of Gemini, our industry-leading AI technology, to enterprises and governments globally, and we are gratified with the level of engagement. The strong demand we are seeing for our vertically integrated AI portfolio is creating new opportunities for Google Cloud across every product area.
Marges en kosten: Turning to margins and expenses. As we have repeatedly stressed, we remain committed to our framework to durably reengineer our cost base as we invest to support our growth priorities. Key contributors to moderating our expense growth include: first, product and process prioritization to ensure we have the right resources behind our most important opportunities and to reallocate resources where we can; second, organizational efficiency and structure. We’re focused on removing layers to simplify execution and drive velocity.
Both product prioritization and the organization design efforts result in a slower pace of hiring, as you can see with our headcount down year-on-year, reflecting the reductions we announced in the first quarter of 2023 and a much slower pace of hiring. We will continue to invest in top technical and engineering talent.
Finally, we continue to execute the other work streams to slow expense growth, including improving efficiency in our technical infrastructure, streamlining operations across Alphabet through the use of AI, increasing efficiency of our spend with suppliers and vendors through our central procurement organization, and optimizing our real estate portfolio.
Capex (investeringen): Q4 $11 mia (hoogste in jaren), driven overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers. The step-up in CapEx in Q4 reflects our outlook for the extraordinary applications of AI to deliver for users, advertisers, developers, cloud enterprise customers and governments globally and the long-term growth opportunities that offers. In 2024, we expect investment in CapEx will be notably larger than in 2023. (zware investeringen in R&D, servers en datacenters om AI te ondersteunen en vermoedelijk ook een van de redenen waarom het aandeel lager ging nabeurs)
Other Bets: we’ve been working to sharpen our investment focus while capturing the upside given compelling technology breakthroughs across the portfolio. For example, last week, Alphabet’s X announced that it would be moving to spin out more projects as independent companies through external capital, giving X the opportunity to bring more focus to the breakthrough technologies it is working on to address some of the world’s most pressing challenges.
Q&A uit de call:
Ruth Porat: Then we talked a lot about this quarter about organizational efficiency and structure, and we’re focused on removing layers to simplify execution and drive velocity. The combination of those two, product prioritization and organizational design work, has resulted in the slower pace of hiring. You can see that in our headcount numbers down year-on-year. You can see it in some of the — in the results that we delivered in the fourth quarter. But as I said in opening comments, we will continue to invest in top engineering.
Analist: And today, you’re helping need to generate creative as well as manage my spend and maximize ROI across multiple Google Services. So how are you feeling about enabling SMBs who otherwise could not advertise with you before? And what kind of TAM expansion tailwind does that create for your revenue growth over the longer term?
Philipp Schindler: Look, as you know, SMBs are a huge focus for us. We mentioned this several times before. They’re part of our GCS channel, not only there’s more in this. But they’ve been under a ton of change over the last few years. And our focus has always been here on investing in solutions that really help level the playing field, and you mentioned several of those. So actually, SMBs can compete with bigger brands and more sophisticated advertisers.
Analist: Maybe one for Sundar and one for Ruth. Just on Search growth, I think there are some concerns on use of competitive AI tools as an alternative to Search. Just wondering if you see any changes in query volumes, positive or negative, since you’ve seen the year evolve and more Search innovative experiences. And what can really make Google stand out versus other AI tools?
And then Ruth, CapEx was $11 mia. A step-up, obviously. Any one-time items in there? Or is that how we should think about the new run rate into ’24?
Sundar Pichai: Thanks, Justin. First of all, look, we think about effects on Search, obviously, more broadly. People have a lot of information choices. So — and user expectations are constantly evolving. And so we’ve been doing this for a long time. And I think what ends up mattering is a strong continuous track record of innovation.
Obviously, generative AI is a new tool in the arsenal. But there’s a lot more that goes into Search: the breadth, the depth the diversity across verticals, stability to follow through getting actually access to rich, diverse sources of content on the web and putting it all together in a compelling way.
And I think, through the year two, when we test, we test Search Generative Experience, particularly against everything that’s out there. And we can see the progress we are making and how much users are liking the experience better. And so I think I feel very good about the progress. And our road map for ’24 is strong both on the Search and the underlying AI progress, including the model. So I’m pretty excited about what’s ahead of us in ’24.
Ruth Porat: And with respect to CapEx — the CapEx of $11 mia in the fourth quarter, as I indicated, was overwhelmingly investment in our technical infrastructure. To your question, there was no one-time item in there. It really reflects is our outlook for everything Sundar and Philipp and I have been talking about, the extraordinary applications of AI within Google DeepMind, Google Services, Google Cloud, it’s across the board for users, for advertisers, developers, cloud enterprise customers, governments. And it’s really the long-term opportunity that offer.
So last quarter, we did note that CapEx would continue to grow in 2024. We do expect 2024 full year CapEx to be notably larger than 2023. As a note, I think you all know this, but timing of cash payments can affect the quarterly CapEx number. But the main point is we’re continuing to invest.
Analist: One question on YouTube AI and one on Cloud. On Cloud first, there’s just this volatility, this material deceleration last quarter and the nice reacceleration this quarter. Is that explained by where we are in the optimization cycle, and it may be generative AI workloads starting to trickle in now and cause that growth curve to bend back up? Any commentary just on the sort of the volatility, the deceleration and the reacceleration that we’ve seen?
And then, Philipp, I wanted to ask on the creative side, and particularly on YouTube and ads and the creative, using AI to improve the creative and really to offer SMBs who have been with Google forever but offer them now performance-based video ad campaigns created by AI. Is that kind of a new growth area? How far along are you in terms of offering this out into the market? And do you think that this opens up a new area of spend that wasn’t there before?
Sundar Picha: Thanks, Mark. On Cloud, let me take that. First of all, a combination of factors. I think definitely excitement around the AI solutions on top of our foundational pillar with data and analytics, infrastructure, security, et cetera. But AI is definitely something which is driving interest and early adoption. And as you saw, that greater than 70% of Gen AI unions are using Google Cloud. And so I think it’s an area where our strengths will continue to play out as we go through ’24, especially when I look at innovation ahead from us on the AI front. And second, I think there are regional variations, but the cost optimizations in many parts are something we have mostly worked through. And I think that was a contributing factor as well.
Philipp Schindler: So on your YouTube question, maybe let me start with a general view. YouTube submission, you know, has enabled millions of creators around the world to share their voice and connect with audiences and obviously build thriving businesses here. And AI has been a very critical piece of this already.
You are obviously aware of the made YouTube announcement where we introduced a whole lot of new complementary creativity features on YouTube, including Dream Screen, for example, and a lot of other really interesting tools and thoughts. You can obviously imagine that we can take this more actively to the advertising world already. As you know, it continues already to power AI, a lot of our video ad solutions and measurement capabilities. It’s part of video rich campaigns. Multi-format ads are — actually, there is a generative creator music that actually makes it easier for creators to design the perfect soundtrack already.
And as I said earlier, AI will unlock a new world of creativity. And you can see how this will — if you just look at where models are heading, where multimodal models are heading, where the generation capabilities of those models are heading, you can absolutely see how this will impact and — positively impact and simplify the flow for creators, similar to what you see already emerging in some of our core products like ACA on the Search side.
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4 Replies
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Wederom bedankt Luc
Ik heb nog niet alles gelezen (aan het werk, geen tijd, lees straks grondig), maar mijn oog viel meteen op de FCF van 69 miljard.
Er staan bijna 6 miljard Alphabet-aandelen uit. Dit brengt de FCF per aandeel op 11,5 brengt en de K/FCF op 13 oftewel een rendement van bijna 7,5% oplevert.
Ik dacht dat alle MAG7- bedrijven peperduur waren, maar dit lijkt mij helemaal niet duur voor z’n bedrijf.
Zoals gezegd, ik heb nog niet alles gelezen, dus waarschijnlijk mis ik iets.
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En het noteert aan amper 23x de winst van 2024 zonder de daling straks bij opening mee te hebben gerekend, en dan heb ik de enorme kaspositie er ook nog niet uitgefilterd. De $113 mia cash krijg je er gratis bij. Eigenlijk moet je die multiple dus nog corrigeren voor cash & cash equivalents.
$113,7 mia cash – $29,6 mia debt = $81,1 mia net cash. Market cap: $1912 mia – $81,1 mia = $1830 mia EV / $83,8 mia verwachte post tax profit van 2024 geeft een forward PE ratio van 21,8. Niet duur in deze markt. Heb recentelijk geen DCF gedaan maar zo uit m’n hoofd verwacht ik te kunnen werken met een rendementseis van 10% en conservatieve assumpties. Nee, niet duur, dus markt maakt zich wel ergens zorgen om. Je wordt aan de huidige koers dus ook wel vergoed voor de onzekerheid die de aandelen met zich meebrengen.
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Bedankt voor de correctie Gunter
Ik had het snel op DeTijd opgezocht, maar had natuurlijk moeten weten dat Alphabet in 2022 nog een aandelensplitsing doorvoerde. Haast en spoed is… 🙂
Aan 12 miljard aandelen krijg je FCF per aandeel van 5,75. Aan de huidige koers 142 USD betekent dat een K/FCF van 24,5. Dat is natuurlijk een pak duurder, maar nog altijd aanvaardbaar voor een bedrijf dat de jongste 5 jaar een gemiddelde ROIC van 20% kan voorleggen (bron Quickfs.net).
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