Exchange: NASDAQ | Sector: Communication Services | Industry: Internet Content Information
Q4 2024
Published: Feb 5, 2025
Earnings Highlights
Revenue of $96.47B up 11.8% year-over-year
EPS of $2.15 increased by 30.7% from previous year
Gross margin of 57.9%
Net income of 26.54B
""AI overviews are now available in more than 100 countries. They continue to drive higher satisfaction in Search usage." - Sundar Pichai" - Sundar Pichai
Alphabet Inc (GOOGL) Q4 2024 Financial Results - Strong Growth Driven by AI and Cloud Innovations
Executive Summary
In the fourth quarter of 2024, Alphabet Inc (GOOGL) delivered robust financial performance, achieving a revenue of $96.5 billion, representing a 12% increase year-over-year. Strength in its core segments, particularly Google Services and Cloud, propelled growth. The management highlighted the company's leadership in artificial intelligence (AI) and significant progress in product innovation, which not only improved user experience but also drove revenue growth across various platforms. Notably, advertising revenue grew by 11% year-over-year driven by strong performance in search and YouTube, despite a backdrop of declining network revenue. Management's optimistic narrative about ongoing AI integration promises further growth opportunities.
Key Performance Indicators
Revenue
96.47B
QoQ: 9.29% | YoY:11.77%
Gross Profit
55.86B
57.90% margin
QoQ: 7.84% | YoY:14.61%
Operating Income
30.97B
QoQ: 8.59% | YoY:30.70%
Net Income
26.54B
QoQ: 0.89% | YoY:28.27%
EPS
2.17
QoQ: 1.40% | YoY:30.72%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $96.5 billion, up 12% YoY (11.77% YoY growth) and 9.29% QoQ.
**Gross Profit**: $55.9 billion, reflecting a gross profit margin of 57.9%.
**Operating Income**: $31 billion, representing a 31% increase YoY (Operating income ratio of 32%).
**Net Income**: $26.5 billion, up 28% YoY, with earnings per share (EPS) at $2.15 (31% YoY increase).
**Free Cash Flow**: $24.8 billion during Q4, contributing to a full-year free cash flow of $72.8 billion.
Financial Highlights
Summary of Key Financial Metrics:
- Revenue: $96.5 billion, up 12% YoY (11.77% YoY growth) and 9.29% QoQ.
- Gross Profit: $55.9 billion, reflecting a gross profit margin of 57.9%.
- Operating Income: $31 billion, representing a 31% increase YoY (Operating income ratio of 32%).
- Net Income: $26.5 billion, up 28% YoY, with earnings per share (EPS) at $2.15 (31% YoY increase).
- Free Cash Flow: $24.8 billion during Q4, contributing to a full-year free cash flow of $72.8 billion.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
96.47B
11.77%
9.29%
Gross Profit
55.86B
14.61%
7.84%
Operating Income
30.97B
30.70%
8.59%
Net Income
26.54B
28.27%
0.89%
EPS
2.17
30.72%
1.40%
Key Financial Ratios
currentRatio
1.84
grossProfitMargin
57.9%
operatingProfitMargin
32.1%
netProfitMargin
27.5%
returnOnAssets
5.89%
returnOnEquity
8.16%
debtEquityRatio
0.08
operatingCashFlowPerShare
$3.2
freeCashFlowPerShare
$2.03
dividendPayoutRatio
9.2%
priceToBookRatio
7.12
priceEarningsRatio
21.81
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- AI Leadership: Sundar Pichai remarked, "We delivered another strong quarter... driven by our leadership in AI and our unique full stack." This underscores the company's commitment to integrating AI across its services.
- Revenue Growth Promises: The CEO also highlighted a combined annual revenue run rate of $110 billion for Cloud and YouTube, indicating solid progress in these segments.
- Strong Q4 Performance: Philipp Schindler noted, "Google Services revenues were $84 billion for the quarter, up 10%, driven primarily by 11% year-on-year growth in advertising revenues." This showcases Alphabet's core strength in ad monetization despite challenges in other revenue streams.
"AI overviews are now available in more than 100 countries. They continue to drive higher satisfaction in Search usage." - Sundar Pichai
— Sundar Pichai
"We will continue to invest in our cloud business to ensure we can address the increase in customer demand." - Sundar Pichai
— Sundar Pichai
Forward Guidance
Looking ahead, management anticipates continued growth, especially in AI-driven initiatives. With solid foundations laid in 2024, expectations are that Google Cloud will continue its upward trajectory, especially as demand exceeds available capacity—a situation that will likely persist, as stated by Anat Ashkenazi: "We exited the year with more demand than we had available capacity."
Management expressed cautious optimism regarding Q1 2025, anticipating headwinds from foreign exchange rates and increased competition in the advertising space but largely maintained a positive long-term outlook for revenue growth. Investors should monitor AI advancements and Google’s continued integration of these technologies.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
GOOGL Focus
57.90%
32.10%
8.16%
21.81%
GOOG
57.90%
32.10%
8.16%
21.81%
TWLO
50.20%
1.15%
-0.16%
-332.63%
SNAP
56.90%
-1.73%
0.37%
497.37%
BIDU
47.20%
11.50%
1.97%
10.38%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given Alphabet's demonstrated resilience in increasing revenue and delivering strong profitability, alongside advancements in AI and cloud technology, the company is well-positioned for long-term growth. Investors may consider GOOGL as a solid investment, especially as product innovations contribute to market expansion. The strong cash flow supports strategic investments while keeping the company agile in responding to market shifts. However, monitoring external economic conditions and competitive pressures will be critical.
Key Investment Factors
Growth Potential
Alphabet’s investment in AI and Cloud services positions the company favorably for sustained growth, with management forecasting ongoing enhancements to user experiences and monetization strategies across all platforms.
Profitability Risk
Key risks include potential slowdowns in advertising revenue growth due to economic pressures, shifts in competitive landscape, and basic currency fluctuations impacting international revenues.
Financial Position
With $96 billion in cash and marketable securities, along with $24.8 billion in free cash flow generated in Q4, Alphabet demonstrates strong liquidity, providing a buffer against market volatility and ample resources for investments.
SWOT Analysis
Strengths
Strong brand recognition and market position in search and online advertising.
Leadership in AI innovation with the launch of new products such as Gemini 2.0.
Large cash reserves enabling continued investment in technology and infrastructure.
Weaknesses
Declining network revenues which may indicate increased competition or saturation in certain markets.
High reliance on advertising revenues, making the company vulnerable to downturns in ad spending.
Opportunities
Expansion of AI capabilities across all services may enhance user engagement and satisfaction.
Increasing global demand for cloud services presents significant growth potential in that segment.
Threats
Intensifying competition from other tech giants, particularly in the cloud and AI spaces.
Economic uncertainties impacting advertising expenditures could affect revenue growth.