The following is the With the recovery of user activities, advertising investment is also slowly recovering From Google parent company recommended by recordtrend.com. And this article belongs to the classification: cloud computing, artificial intelligence, Search Engines, Mobile Internet.
February 3, 2021 news, Google parent company alphabet（ NASDAQ:GOOG ）The company’s fourth quarter results as of December 31, 2020 were released after the US stock market closed on Monday (early Tuesday, Beijing time). [after hours, Google’s parent company alphabet surged nearly 6%, and Q4’s revenue increased 23% year on year]
According to the report, the fourth quarter revenue of alphabet was US $56.898 billion, an increase of 23% compared with us $46.075 billion in the same period of last year. Excluding the impact of exchange rate changes, it also increased by 23% year on year, exceeding Wall Street analysts’ expectations. Alpha’s fourth quarter net profit was $15.227 billion, compared with $10.671 billion in the same period last year, and its diluted earnings per share was $22.30, which also exceeded analysts’ expectations, compared with $15.35 in the same period last year.
After the financial report was released, sun Dar Pichai, CEO of Google, Ruth Porat, chief financial officer of alphabet, and Philipp Schindler, CBO, attended the financial report conference call to interpret the key points of the financial report and answer questions from analysts.
The following is the actual record of the conference call:
Eric J. Sheridan, analyst at UBS Securities: the first question is about Google cloud computing platform (GCP). The management mentioned that there are huge opportunities in this field before. How should we understand it? What strategic factors will the company consider when investing in this field after the epidemic is over? What factors will accelerate the company’s investment in cloud computing platform? YouTube has seen a very rapid growth in this quarter, so what is the company’s business liquidation plan in the next few quarters? What strategies are expected to be adopted to achieve user growth?
Pichai: in recent years, we have witnessed the changes of users, and have a deep understanding of the market dynamics and our own advantages. Obviously, the more investment in this field, the longer the time, the higher the economies of scale and returns. We generally plan our investments in advance to ensure that we can meet the needs of our global users. However, whether investment will be strengthened in the future has not been determined.
Paulat: we will comprehensively evaluate opportunities and benefits across industries and regions, and clearly position ourselves. If you go to the company’s data analysis center, you can see that we are really carrying out data-based analysis on each strategy. This is what we mentioned, focusing on the interests of users and investors, deploying investment plans in advance, so as to maximize the revenue of both sides.
Schindler: About youtube, direct advertising didn’t exist three years ago, but now it is one of the fastest growing services on the whole platform. It brings a lot of convenience to our advertisers and unlocks a lot of new opportunities. It can make video marketing solutions reach terminal customers more quickly. Some data can be shared. 60% of direct advertising users are new users of the YouTube platform. In the first half of 2020, we doubled the number of active advertisers with direct advertising, and 70% of YouTube users said that they had purchased products because they watched video ads.
Online machine learning has become an important development focus of the company, which can make the right content reach the right audience. This technology brings 140% growth to the click through rate of the platform.
Obviously, YouTube has become an important platform for brand advertisers to develop market strategies and obtain users. Although brand advertising declined in the first half of 2020 due to the epidemic, it has returned to its original level in the third and fourth quarters of last year.
In the past, advertisers couldn’t reach all users, but now with youtube, they can reach a wider audience than TV networks. At the same time, the advertising effect is getting better and better with the development of our technology.
It can be said that YouTube music is becoming more and more popular and has become the service of choice for most users. We found that users want to get a better experience, so we added music and video download functions to our member users. This subscription service brought us extra revenue.
In 2019, the company invested nearly $3 billion in the music industry, and now YouTube has obtained 30 million paid music members and has business distribution in 95 countries around the world.
Douglas t. anmuth, securities analyst at JPMorgan: what are the possible factors influencing the current development of Google’s cloud computing platform? In the long run, what are the structural differences and advantages between Google and other competitors in terms of gross profit rate?
Pichaie: now users increasingly want to work and live electronically. Google products have brought them all-round solutions. We have also been committed to strengthening R & D innovation in various industries, and have been strengthening cooperation between companies.
As for the gross profit rate, I mentioned before, because we entered many important fields earlier than some competitors and made early planning and investment, we have great advantages in the structure of gross profit rate.
There are many factors affecting the gross profit rate, such as the number of products, industries and regions, so the company has a fixed cost structure. And because of our rational and forward-looking investment, it is expected that in the long run it will bring us more income.
Jeffery analyst: the company mentioned that it has strengthened its investment in brand advertising in this quarter, so what’s the current performance of this investment? Apart from the holiday season, what is the user’s feedback on this?
Paulat: financial data can reflect the growth of advertisers’ activities and the rise of users’ online activities. The main driving force is the retail business, while the fast consumer goods and entertainment media sectors also promote the growth of advertising business.
The direct effect advertising mentioned just now has been growing at a very high speed. The rise in YouTube revenue reflects our advantage in brand advertising and user access.
Goldman Sachs analyst: Thank you very much for the details of the growth drivers of youtube and search. Can you give further quantitative indicators of these factors? Please compare the distribution of advertisers’ main investment on the platform before and after the epidemic?
Paulat: in fact, after the outbreak of the epidemic, the advertising investment of advertisers declined at the beginning, but with the recovery of user activities, the advertising investment also slowly recovered, which was also mentioned in last year’s conference call. We are glad to see that business activities in almost all industries are slowly returning to the previous level. We see great opportunities for this, and many small and medium-sized enterprises hope to gradually realize e-commerce, so our task is also to help them in this regard.
Analyst: we can see that the company achieved significant growth in retail and business in the fourth quarter of last year. What are the major problems that these dealers hope Google can continuously solve for them? The second question is about the company’s new product discover feed. What are the possible obstacles that the management thinks will prevent the commercialization of the product?
Schindler: first of all, we hope to gradually establish a sustainable and healthy business environment. When users buy goods through Google, we hope to recommend the most affordable choice they need from hundreds of categories. Last year, we made an effective upgrade to Google shopping. So far, user feedback has been very positive. Free shop, free Commission and user praise have greatly helped online retailers to remove marketing barriers. So Google for e-commerce is a very good platform to explore potential consumers, and can improve the flow of online business website. The convenient and simple purchase process improves the user stickiness, and the powerful advertising service continues to help businesses improve the product exposure and customer acquisition rate.
In addition, Google’s business environment provides a broad soil for global supply chains and small businesses. We open the platform to third-party suppliers, which brings more choices for consumers, such as cooperation with PayPal. We also launched a function that allows users to browse product related information and videos on a specific platform. At present, all the feedback is very positive, and our advertising revenue has recovered since the second half of last year, while accelerating the further growth.
We launched discover advertising six months ago. Now our ads can reach nearly 3 billion users around the world through discover, youtube and gmail. Advertisers like our platform very much because we can help them achieve their marketing goals efficiently.
Analyst: does the growth of advertising revenue come from the investment of TV business or YouTube? The second question is about user privacy protection. We can see that many industries have made corresponding adjustments in recent years. What are the plans of Android system to strengthen data protection? Will the adjustment of privacy protection affect the performance of advertising revenue?
Schindler: we can see that more and more brand users move their advertising to youtube, and the TV advertising rate continues to decline. Traditional TV advertisers also began to seek electronic ways to get those who have not watched TV.
Internet TV has become a new hot spot. In the United States, more than 100 million users will connect youtube and Youtube TV to the TV screen. For example, in the second half of last year, we launched a YouTube client specially designed for TV screen, which also brought advertisers more channels to get consumers.
On the second question, users hope their privacy can be protected, so we have been committed to strengthening the data protection of the platform to provide a secure network ecological environment for our enterprise users. In 2019, the company released a privacy protection scheme called privacy sandbox, so that user data will not be saved in a third-party platform, but in a group. At present, we have put this solution into trial operation in many industries, and the feedback is very positive.
Analyst: TV streaming media is a very promising field. What is Google’s current development plan and framework?
Pichaie: we have been trying to break many restrictions on reaching customers. This is the way Google works. We are always committed to cross platform, cross device and national restrictions.
In order to improve the user experience, we hope that users can browse the content smoothly on the TV screen, so we have made corresponding adjustments on Google TV, youtube, chrome and other applications. In the long run, user experience is the focus of our development.
At present, mobile phones are still the main channel to watch YouTube. In the coming quarters, we hope to realize the function of multi screen browsing, so that TV and other devices can also be used as the main carrier. Of course, this will bring us a very considerable revenue.
Analyst: the management has mentioned the company’s development plan in the field of artificial intelligence in the next 10 to 20 years and will unlock new cloud computing functions. From a long-term perspective, what do you think are the new applications that may appear in the future? A few years ago, the management mentioned that many small and medium-sized enterprises do not have good advertising channels, so Google hopes to help them. In general, Google’s online business provides them with a once-in-a-lifetime opportunity to develop their business. So is Google’s goal to combine tools to help these companies reach different consumers?
Pichai: artificial intelligence is an area that Google has been paying close attention to. In the past few years, we have also made remarkable progress, which can accurately identify pictures, sounds, movies and so on. But of course, we are still facing many problems, so we have invested in order to better strengthen the construction of artificial intelligence architecture.
Schindler: at present, the overall environment is still very challenging, especially at this time last year, when we saw the scale of the epidemic, we tried to adjust our products, in order to give customers, especially big customers, a signal that we will always stand behind them and help them.
For example, at the beginning of last year’s epidemic, the travel industry was badly hit. After the end of the first wave of blockade, Google search launched keywords such as “vacation house” and “rental houses near me”.
Second, we always hope to do something for these small and medium-sized enterprises. For example, in the past five years, we have added a lot of business information of these companies to Google maps to help them expand their users. In 2020, we will launch new functions, and now users can easily connect with their favorite SMEs on the map. For us, this is not a small investment, but we think it will get a considerable rate of return in the future.
Interview record of 1q20 financial report conference call is still recruiting new employees, but the speed is slowing down Alphabet:1Q20 Revenue in the first quarter was 41.159 billion US dollars, up 13% year on year. Net profit of Google parent company alpha: 2q20 was 6.959 billion US dollars, down 30% year on year. Revenue of Baidu: 1q20 was 22.5 billion yuan, exceeding market expectation Will continue to make large-scale investment in Google cloud Baidu: 3q20 net profit of $2.015 billion, year-on-year performance turn loss alpha: 4q20 revenue of $56.898 billion, year-on-year growth of 23% Baidu: 1q20 financial report teleconference record Competitors cannot gain market share and make profits at the same time Sogou: 2q20’s total revenue is 261.2 million US dollars, input method mobile daily life exceeds 480 million US dollars, alpha: 3q20’s revenue is 46.173 billion US dollars, up 14% year on year
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