Alphabet Q1 2018 Earnings [pdf]

>Capital expense for Google more than triples: up from $2.4 billion to $7.7 billion year-on-year

Part of that also comes from Google buying up $1 billion of north Sunnyvale properties over the past year [0]. They bought roughly 50 properties. The article [0] has a nice map that shows since July 2017 Google has bought up roughly half of the Sunnyvale Moffet Park area.

I am mildly surprised how little coverage Google's buying spree has received.

[0] https://www.mercurynews.com/2017/12/22/google-expansion-ques...

> Capital expense for Google more than triples: up from $2.4 billion to $7.7 billion year-on-year. That probably reflects spending on hardware, including the Nest division.

$2.4 billion of that $7.7b is from their Chelsea Market purchase.

> - Porat says Waymo has achieved 5 million miles of driving on city streets.

Is that and the other Porat comments from the earnings call? The PDF doesn't seem to mention that.

"- 1Q Paid Clicks +55%"

Curious what makes that possible. I thought that most monitizable queries already had 100% of the above the fold content as ads.

At some point, Google is no longer a search engine, but rather, a targeted ad engine with some organic search if you bother to click to page 2.

Starting to feel like the old yellow pages in it's waning days.

Edit: Honestly curious. How do you keep outpacing general internet growth when you've already over optimized click growth. It's an honest question, not snark. I'm curious where the magic lies. I'm honestly surprised there's still magic after a couple of decades of squeeze. There's only so much blood in the turnip. Downvotes don't bother me, if there is some explanation. I'm here to learn.

If anyone is curious about what companies in the S&P 500 rank higher in the revenue per employee metric: https://craft.co/reports/s-p-500-revenue-per-employee-perspe...

Usually companies grow at a slower rate as they get larger.

Alphabet's growth rate is actually accelerating.

And they're not acquiring this growth, they're generating it organically.

Truly astounding.

It also means that their employees aren't being paid as well as they should be. It also means that they are enjoying a monopolistic position.

Usually, when a business is as lucrative as google's, competition arrives. But it seems like tech doesn't work that way.

For example, if a chicken restaurant is making $1.5 million in revenue per employee, then you'd see tons of chicken restaurants pop up to compete. Even the employees, seeing such extraordinary revenue, would quit and open up shop. But for a variety of reasons, tech doesn't seem to work that way.

Is it lack of capital? Lack of opportunities? Lack of tech-oriented people? Lack of entrepreneurs?

> That's crazy

It's ridiculous. It's amazing how profitable large tech companies are. What's even more puzzling is why there aren't more googles/facebooks/etc, especially in other countries like france, germany, britain, etc.

Google has billions of users and has thrown out everything that doesn't scale, like support or customer service. A lot of support and content moderation is done by volunteers (there's a certain hilarity to the way the world's most valuable corporation recruits unpaid labor as if it's some sort of charity) in Google Local Guides or Google Help Center type stuff.

Also, the "cost per employee" can look artificially higher because they contract out so many of the support positions they do have. I think "employees" mostly constitute management, marketing, and engineers?

Who is counted in the 85k number? Are low-wage positions (like janitorial services) considered employees, or are they employed through subcontractors?

That just means their lower margin work is performed by vendors and contractors.

Yes if you don't have any support staff it is easier to reach such numbers.

Seems like a good time for employees to unionize.

I have had nothing but good experiences in using Google Cloud. The only issues I've had is in other tools/libraries being specifically targeted at AWS and not working with other tools. Seems like the kind of thing that fixes itself as GC gets bigger / more used.

It'll be interesting to see how things play out. In the enterprise space the only two I hear companies talk about it Azure & AWS...

Most of the change is due to a one time change in accounting policy, operating income was up but "only" by $500m, whereas the impact of the change in accounting was over $3b

What does EU care about how much Google pays in US tax?

double EPS. I love how normal this has become that people aren't even that shocked anymore when numbers like these get released. republican taxes lmao

Keep expanding into more and more markets. Google has had over 90% of the search market for almost 10 years. Android barely existed 10 years ago.

Programmatic is a big part of it (read: Youtube). It means that the ads business on Youtube has made massive strides in the past year.

That's not the only thing, but it's a big part of it.

They didn't grow. They got a tax cut.

Wow you're either a Google employee or huge fanboy. Every single one of your comments is pro-google/anti-apple.

EPS doubles (actually grows 72%) due to some one-time adjustments.

Revenue is up 26% year-over-year. Operating income is up 6.6% year-over-year.

The stock is up ~25% over the last 12 months, by the way.

Profit margin is down, 27 to 22.

Maybe check Amazon's tax rate before "this Republican tax policy" went into effect prior to blaming low corporate tax rates on one party.

If you think lobbyist-driven tax policy in America is ONLY done by Republicans, you should probably expand your reading beyond CNN / WashPo. You're right that the federal government that creates the tax policy is for sale, but it's not just the Republicans.

>Literally their entire Net Income increase from $5.4b to $9.4b is due to a tax cut from 20%

Hyperbole. Revenue is up $6.4B YoY from $24.75B to $31.1B.

Corporate tax raises relatively little revenue, and most Western European countries don’t rely on it much because its easier to tax individuals.

If we don’t want to be getting more in debt we should raise taxes on middle class people to the level of say Germany. In a state like California, our taxes on rich people and corporations are already about as high as in Germany, its our taxes on people making sub-200k that really dramatically lower. That’s where most of the income is—in the 50-99% range.

The US corporate tax rate is now more in line with the OECD average: https://taxfoundation.org/us-corporate-income-tax-more-compe...

I don’t get the whole issue with low coporate taxes. I get why people should be taxed so as to reduce consumption and increase production, but a coporation is not a person, so why hinder their ability to further productivity and economic output? It’s redirecting money earned that could be used to further economic activity and redirecting it to the hands of some highly corruptable bureaucrat in public office given the responsibility to handle way more money than their pay-grade should allow. I understand if the government is hurting for money, they may have to reach into coporations, but fundamentally corporations should not be the primary source of government income (or else government would be even more beholden to coporations instead of citizens). Maybe I’m missing something here (and I’m totally willing to admit that), so if someone can enlighten me behind the rationale please do so.

I know it's politically unpopular, but most economists across the political spectrum believe that corporate taxes should be eliminated entirely.[0] It's more effective to tax people directly as the corporate tax is extremely volatile and it takes away money that could be productively reinvested.

[0] https://www.npr.org/sections/money/2012/07/18/156928675/epis...

How can it be true that their net income doubled because they went from keeping 80% of their profit to keeping 89%?

If paying 11% is Absolutely obscene I would like to know what the adjective is for Amazon paying 0%.

This comment is factually wrong (as pointed out by other responses) and evinces sadly vile sentiments.

The US corporate tax rate had grown until 2017 to be much higher than it is in Western European countries (and remains relatively high). If you, like many anti-Republicans, think that Sweden is an interesting model -- please note that Swedish corporate taxes are much lower than in the US. [1]

As for the notion that profits, or their increase, are "obscene" -- this is the essence of the anti-capitalist mentality.

[1] https://taxfoundation.org/how-scandinavian-countries-pay-the...

Can someone without bias ELI5 on why I pay ~30% in taxes, but Alphabet pays 11%?

How? Google’s money doesn’t belong to you or the government. Taxes shouldn’t be confiscatory. Is Google using more government services than a less profitable company or a similar size? Of course not. So why should they pay more? How about the millions in taxes paid by their employees? Or the millions in sales taxes paid by employees, or the millions in property taxes paid by employees? Or all of the businesses who sell products to employees? Or the capital gains realized by shareholders that are then used to invest in other businesses or buy products and services?

Even if Google paid 0%, they are a massive net economic gain for the country.

Remember, corporations don’t pay taxes, people do. If Google paid more, prices for their services would rise and that would then increase customer acquisition costs for businesses which would result in lower profits for the businesses which means they hire fewer people and thus lower wages and higher unemployment which results in even fewer taxes collected and then, before long, you have the economy of France. Google would then lose business and contract in size and then they would pay even less in taxes.

The Laffer Curve is a real thing.