Google Q2 2019 Earnings: A More Helpful Google Bounces Back
Google delivered a solid earnings report last week, bouncing back from its disappointing Q1 to report 19% revenue growth over the same period in 2018. As in past quarters, the growth was led by Mobile Search, YouTube and Cloud. While Google doesn’t break out Cloud as a separate segment, it did indicate that Cloud is now generating $8 billion revenue on an annual run rate.
Many analysts tried to understand what led to the increase in revenue growth, but Google emphasized the variability of its testing of new programs rather than any definitive event or change that happened in Q1. In addition to its quarterly results, the company also announced that it has authorized a buyback of Alphabet stock of up to $25 billion.
Highlights from the quarter include:
- Revenue increased 19% for the quarter (22% on a constant currency basis) totalling $38.9 billion.
- Other revenues were up 40%, which includes Cloud, Play and hardware (Home, Pixel, etc.), totalling $6.2 billion.
- Operating income was $9.2 billion, up from $8.1 billion a year ago (adjusted to account for the European Commission fine of $5.1 billion).
- Hiring continued and Google now has over 100,000 employees.
- Paid clicks increased 28% on Google properties. While significant, this is half the growth rate over the last 10 quarters and bears watching closely as we approach holiday season.
- Average cost per click (CPC) was down 11%.
Since the Google Marketing Live event, the overall theme projected by Google has been one of “helpfulness.” This earnings call was no exception. CEO Sundar Pichai opened his remarks by stating that recent announcements were “all part of our broader vision to build a more helpful Google for everyone.” This sentiment, he said, was the evolution of Google from a company that provides answers to one that helps you get things done. From the Google Assistant to improvements in Google Maps, the broad ecosystem of Google products really creates synergies for its users. And it’s where we see significant areas of interest for Google around shopping.
One area that Google seeks to be more helpful for shoppers is through new brand and product discovery. We’re already starting to see this in the personalization being applied to Google Shopping. Rather than displaying a simple search box, the new Google Shopping interface looks like this:
The same focus on improved shopper experiences can be found in the new Gallery and Discovery ads — both of which were announced at Google Marketing Live and will be rolling out in a bigger way later this year. These ad types create a much more immersive experience for consumers and are optimized for mobile.
Pichai described the new, unified shopping experience within Google Shopping Actions — centered around the universal shopping cart — as all part of what “help to make Google more shoppable.”
We’re already starting to see this unified shopping experience roll out across Google properties in place of the separate Google Express site, and this development is something we’ll watch closely — especially as we monitor how “helpful” Google can be to its advertisers this holiday season.