Google Q4 2021 Earnings

Numbers

• Revenue: $75.3B vs $56.8B in Q4, 2020
• Operating Income: $21.8B vs 15.6B in Q4, 2020
• Net Income - 20.6B vs 15.2B in Q4, 2020
• Operating margin - 29% vs 28% in Q4, 2020

Segment Breakdown

• Google search 43.3 vs 31.9B in Q4, 2020 up 35%
• Google Cloud revenue: $5.5 billion vs. 3.8B in Q4 2020 up 44%
• YouTube ads: $8.6 billion vs. $6.8 billion in Q4 2020 up 26%
• Traffic Acquisition Costs (TAC): $13.4B billion  vs. $10.4B
• Google Network 9.3B vs 7.4B in Q4, 2020 up 25%
• Google Other(hardware, playstore, non-advertising youtube revenues) 8.1B (6.6B in Q3 2020) up 22%

Operating Income breakdown

• Google Service - 25.9B
• Cloud lost 890M in Q4. Prediction is that in 2022 Cloud will be cash flow positive
• Other bets lost 1.7B
• Google ends the quarter with 139B in cash
• Stock split 1:20

Highlights and Opinions from earnings call

• Search 
• In the fourth quarter, retail was again by far the largest contributor to year-on-year growth of our ads business. Finance, media and entertainment and travel were also strong contributors.

• Our new AI models are helping to create information experiences that are truly conversational, multimodal and personal. For example, Multitask Unified Model, or MUM for short, has improved searches for vaccine information. And soon, we’ll introduce new ways to search with images and words simultaneously.

• In October, we introduced a new AI architecture called Pathways. AI models are typically trained to do only one thing. With Pathways, a single model can be trained to do thousands, even millions of things. From MUM to Pathways to BERT and more, these deep AI investments are helping us lead in search quality. They’re also powering innovations beyond Search. 

• Retail
• The future of retail is omnichannel. And we continue to invest in new features and next-gen experiences so merchants and shoppers can benefit. Global searches for gift shops near me jumped 60% year-over-year in October, with searches for gifts near me up 70% in Google Maps. People increasingly want to know what’s available nearby before they get to the store. Our new in-stock filter helps with just that. Shoppers can find local stores that carry the products they want right from search, like a new tennis racket or that last-minute birthday gift. Showing in-store availability helps businesses attract local customers, and they’ve caught on. One in four local offers across shopping and Google.com are taking advantage of our curbside pickup badge. 
• Retailers are also turning to us to help them transform and accelerate growth. Take Warby Parker, who drove a 32% year-over-year increase in its Q3 sales by not only opening stores and expanding its contact lens business, but also by tapping into Google across surfaces. Omnichannel bidding, smart shopping campaigns and an expanded presence in Maps to promote in-store eye exams contributed to Warby’s success and it since launched its first-ever brand awareness campaign on YouTube, which brings me to YouTube, where our commerce opportunity remains really exciting.
• We’re making it easier for viewers to buy what they see and simpler for advertisers to drive action with innovative solutions like product feeds and video action campaigns and emerging formats like live commerce. Backcountry.com generated a 12:1 return on ad spend with product feeds in 2021 and plans to double its investment in 2022, while Samsung, Walmart and Verizon partnered with creators to host shoppable holiday livestream events in the U.S. 
• As for our brand business, momentum remains strong. We continue to make inroads in unlocking TV brand budgets, and we’re still in the early innings of what’s possible with Connected TV. Let’s take a minute to double-click into the full funnel trend I talked about last quarter. YouTube’s ability to drive both massive reach and action is becoming more clear to more advertisers. In a recent study, DR advertisers who added YouTube branding formats not only drove increased reach, but also averaged 9% more conversions. At the same time, we see more brand advertisers adding action, like Nike Korea, which saw higher conversion rates and drove 50% plus incremental reach by adding video action. Another huge focus for us is continuing to deliver for our partners and key ecosystems, all while delighting users.
• AI

• DeepMind’s protein-folding system AlphaFold, was recently recognized by Nature & Science Magazine as a defining breakthrough. To illustrate the scale of the team’s achievement, it took scientists more than 50 years to figure out the structure of 150,000 proteins. The DeepMind team has now expanded that number to 1 million, and they think they will get to more than 100 million this year.

• Retail
• We've seen explosive growth in digital over the last 20-some months. But as the world begins to reopen, shoppers are returning to stores. Brick-and-mortar isn't dead. Instead, omnichannel is in full force. Searches for open now near me are up 4 times globally versus last year. Strong growth in local shopping queries means people are researching their visits to stores more often before they go. As a result, we've seen more advertisers include in-store sales alongside e-commerce goals to drive omnichannel growth. Adoption has nearly doubled over the past year.
• Youtube 
• We just hit 5 trillion all-time views and have over 15 billion views each day globally. 
• The number of YouTube channels that made at least $10,000 revenue was up more than 40% year-over-year, and we are continuing to improve support for artists and creators. More creators than ever are earning money from our non-ads products like Super Chat and channel memberships.
• Pixel

• In Q4, we set an all-time quarterly sales record for Pixel. This came in spite of an extremely challenging supply chain environment. The response to Pixel 6 from our customers and carrier partners was incredibly positive. And AI is making Pixel even more helpful. As one example, Live Translate detects whether a chat message is in a different language and automatically translates it in up to 48 languages.

• Cloud
• Alphabet’s backlog increased more than 70% to $51 billion, most of which is attributed to Google Cloud. This growth comes from many leading businesses, including Albertsons and LVMH; digital natives, including Box and Spotify; and public sector agencies, including the Commonwealth of Massachusetts, the Defense Innovation Unit and the USDA.
• For the full year 2021, compared with the full year 2020, we saw over 80% growth in total deal volume for Google Cloud Platform and over 65% growth in the number of deals over $1 billion.
• For the full year 2021 compared with the full year 2020, the number of customers spending more than $1 million through the marketplace increased by 6 times. Customer spend through channel partners on GCP more than doubled, and the number of active certifications within our top global systems integrators more than doubled as well. 
• Partnerships
• Our expanded partnership with Snap to deliver a first of its kind quick tap to Snap feature is a great example. Our Pixel 4A with 5G or newer pixel phones users can access Snapchat directly from their lock screen, making Pixel the fastest phone to make a snap. And then across our Pixel and AR teams, we’re working with the NBA to create exciting immersive experiences for fans using 3D and AR technology. And the lighting doesn’t stop there. With Adobe, we are collaborating on a multiyear journey to bring Photoshop, Illustrator and its other flagship products to the web, a testament to the web as a first-class platform for creativity and productivity.
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• Waymo
• October marked the one-year anniversary of our Waymo One fully autonomous commercial ride-hailing service in Arizona. In San Francisco, hundreds of riders are using Waymo One as part of our trusted tester program, but many more on the waiting list. And Waymo Via continues delivering freight into the Southwest U.S. and developing partnerships with key industry players.