Earnings report sharing/Google's revenue exceeded expectations and issued dividends! Stock price rose 10%??

$Alphabet(GOOGL.US) Google announced its latest Q1 earnings report after the market closed on April 26th. The data showed that revenue was slightly higher than expected, with advertising revenue accelerating, benefiting the stock price! What other data does Dolphin Research have for us to look at together?

Q1, 2024

Revenue increased 15% year-over-year to $80.54 billion, higher than the market expectation of $78.59 billion;
By segment: Google advertising revenue increased 13% year-over-year to $61.66 billion, higher than the market expectation of $59.2 billion;

Advertising revenue can be further divided into three parts:

Google Network advertising decreased 1% year-over-year to $7.41 billion,

YouTube advertising increased 21% year-over-year to $8.09 billion, higher than the expected $7.72 billion,

Google Search advertising increased 14% year-over-year to $46.16 billion, higher than the expected $43.2 billion;

Google Cloud revenue increased 28% year-over-year to $9.57 billion, higher than the market expectation of $9.35 billion,

Operating profit for the segment was $900 million, with an operating margin of 9.4%, both significantly higher than the $190 million and 2.6% in the same period last year;

Google's other revenue, including hardware, Google Play, and YouTube's non-advertising revenue, reached $8.74 billion, mainly driven by growth in YouTube subscriptions;

Other income, including Waymo autonomous driving and Verily life sciences, increased 72% year-over-year, with a loss of $1.02 billion, narrowing by nearly 17% compared to the same period last year;

EPS increased 62% year-over-year to $1.89, higher than the market expectation of $1.51;

Operating profit increased 46% year-over-year, with an operating margin of 32%; net profit increased 57% year-over-year to $23.66 billion;

Traffic acquisition costs (TAC) increased 10% year-over-year to $12.95 billion, slightly higher than the expected $12.74 billion. This is the amount Google pays to partners to attract traffic to its search engine. After deducting this cost from revenue, the remaining amount was $67.59 billion, higher than the expected $66.07 billion. Additionally, the ratio of TAC to advertising revenue decreased, improving profitability;

Google announced its first-ever dividend and a $70 billion stock repurchase program;

Future Expectations

Google did not provide formal guidance this time. Currently, Google will continue to control the pace of expense growth while increasing investment in technical infrastructure to improve profitability. It expects the 2024 operating margin to be higher than in 2023;

Additionally, capital expenditures in the coming quarters are expected to be roughly flat or higher than Q1 levels. Compared to Meta's announcement of a significant increase in capital expenditures, Google appears more confident in its outlook for the market;

Summary

This quarter's revenue was higher than expected, with year-over-year growth reaching its highest rate since Q2 2022. Global business saw double-digit growth, with the U.S. growing the most at 18%, while EMEA and Asia-Pacific grew 13% and 14%, respectively;

Core advertising revenue increased significantly this quarter, indicating continued recovery in the advertising market. Both direct and brand advertising performed well, with retail contributing significantly to revenue. For YouTube, Shorts monetization is actively progressing, with ads supported on mobile, tablet, and TV devices. In the U.S., Shorts monetization conversion rates were twice as high as mid-roll ads over the past year. While satisfied with the current momentum in the advertising market, Google noted that future quarters may face pressure from higher comparables. Additionally, YouTube and Cloud businesses are expected to collectively exceed $100 billion in annualized revenue by year-end;

Regarding AI, Google stated it has laid a solid foundation for the next wave of AI innovation and highlighted the integration of AI with Google Search, enabling users to ask more complex questions. While the impact of AI on search remains unclear, Google expressed confidence in managing related development costs and outlined clearer pathways to monetize AI technology through advertising, cloud, and subscriptions;

Finally, Google's board approved a cash dividend program, announcing a $0.20 per share cash dividend and authorizing a new $70 billion stock repurchase program;

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