Thread by Abdullah Al-Rezwan (Mostly Borrowed Ideas)
- Tweet
- Apr 27, 2022
Thread
1/ $GOOG 1Q’22 Update
If you are *owner* of GOOG, this was mostly another impressive (yawn!) quarter. Just a little deceleration in YouTube, and boy this almost became YouTube earnings call despite contributing ~10% revenue and even less earnings.
Here’s my notes.
If you are *owner* of GOOG, this was mostly another impressive (yawn!) quarter. Just a little deceleration in YouTube, and boy this almost became YouTube earnings call despite contributing ~10% revenue and even less earnings.
Here’s my notes.
2/ Search continues to post >20% growth quarters even at this scale. YouTube ads growth, however, slowed. On 2-yr/3-yr basis, it still looks pretty good. QoQ deceleration for YT in 1Q’22 was -20% (vs -13% in 1Q’21), so some softness certainly there.
Cloud maintains >40% growth.
Cloud maintains >40% growth.
3/ Operating margin remains close to ~30% although incremental margin almost halved.
Following some rapid improvement in margins, cloud seems to be stuck in negative mid-teen operating margin. Given the size of opportunity, better to be patient with margins.
Following some rapid improvement in margins, cloud seems to be stuck in negative mid-teen operating margin. Given the size of opportunity, better to be patient with margins.
4/ Search
"Q1 travel searches were above Q1 '19 pre-pandemic levels. Query growth in categories like beaches and islands were up 27% versus 2019, while vacation rentals rose 37%"
"Q1 travel searches were above Q1 '19 pre-pandemic levels. Query growth in categories like beaches and islands were up 27% versus 2019, while vacation rentals rose 37%"
5/ "with respect to Search and ATT, there's really nothing to highlight. We haven't seen a noticeable shift in spend."
Let's move onto YouTube now.
Let's move onto YouTube now.
6/ "YouTube shorts is now averaging over 30 billion daily views. That's 4x as much as a year ago...As we've always done with products, we focus on building a great user experience first, and we will work to build monetization over time."
7/ "viewers are watching over 700 mn hours of YT content on TV every day...we will give YT's connected TV viewers new smartphone control navigation and interactivity features, allowing people to comment and share content they are watching on TV directly from their devices"
8/ YT just flexing some numbers in CTV space
"Over 135 million people in the U.S. were reached via YouTube on connected TVs in December...YouTube accounts for over 50% of ad-supported streaming watch time on connected TVs among people ages 18 and up."
"Over 135 million people in the U.S. were reached via YouTube on connected TVs in December...YouTube accounts for over 50% of ad-supported streaming watch time on connected TVs among people ages 18 and up."
9/ "the number of YouTube channels that had made at least $10K in revenue, was up more than 40% YoY"
"from the outset of the war, there was a pullback in advertiser spend, particularly on YouTube in Europe."
This doesn't appear to be great news for tomorrow's earnings for Meta.
"from the outset of the war, there was a pullback in advertiser spend, particularly on YouTube in Europe."
This doesn't appear to be great news for tomorrow's earnings for Meta.
10/ "150 mn people across 40 countries are using Google Pay."
"99% of developers qualify for a service fee of 15% or less. While this impacted our short-term results, we think it's the right long-term approach to support the ecosystem and to be the most developer-friendly"
"99% of developers qualify for a service fee of 15% or less. While this impacted our short-term results, we think it's the right long-term approach to support the ecosystem and to be the most developer-friendly"
11/ "Google Meet can live stream to up to 100k people who can also participate in Q&A"
"Waymo became the first company to run fully autonomous ride-hailing operations in multiple locations simultaneously"
Wing launched on-demand drone deliveries, did 50k deliveries, up 3x YoY
"Waymo became the first company to run fully autonomous ride-hailing operations in multiple locations simultaneously"
Wing launched on-demand drone deliveries, did 50k deliveries, up 3x YoY
12/Buyback
GOOG continues to deploy almost entire FCF in buyback. More importantly, diluted # of shares in Q1 declined by 10 mn which was almost equal to # of shares decline in entire 2021. Net Cash is still >$100 Bn. The more stock goes down, the more accretive it is
GOOG continues to deploy almost entire FCF in buyback. More importantly, diluted # of shares in Q1 declined by 10 mn which was almost equal to # of shares decline in entire 2021. Net Cash is still >$100 Bn. The more stock goes down, the more accretive it is
13/Outlook
2Q'22 will face the toughest comp which is exacerbated by suspension of operations in Russia (~1% of revenue in 2021) and FX headwinds which has higher impact on operating income since expenses are in USD.
2Q'22 will face the toughest comp which is exacerbated by suspension of operations in Russia (~1% of revenue in 2021) and FX headwinds which has higher impact on operating income since expenses are in USD.
14/ With ~$82 Bn TTM Operating income (OI) and ~$1.6 Tn mcap, stock currently trades at ~20x LTM OI. Unless you think search, YouTube have peaked in earnings and Cloud is structurally unprofitable forever, the multiple is only going down the further you look out. Plus buybacks. 
End/ I will cover $FB tomorrow.
All my earnings threads can be found here: mbi-deepdives.com/twitter-threads/
All my earnings threads can be found here: mbi-deepdives.com/twitter-threads/
Mentions
See All
Nick Huber @sweatystartup
·
Apr 27, 2022
Great thread. Thank you.