Google Q2 Earnings Review

Alphabet reported results on Tuesday after the market closed. In this article, I’ll go over the company’s financials, breakdown by segment, management’s commentary and outlook. At the end, I’ll share my take on the quarter and what I’m doing portfolio-wise.

Google had a period where it became uncertain if it’d return to growth or not. After several quarters of acceleration, yearly growth may be stabilizing. Revenue reached 84.74 billion dollars, increasing 14% on a yearly basis and more than doubling over the past 5 years. Almost all segments contributed to this.

Alphabet reported gross profit of 49.2 billion dollars, implying a margin of 58.1%, which expanded 90 bps yearly. Operating income came in at 27.42bn, substantially up from last year’s 21.83bn, and with a margin of 32.4%. Net income generated was 23.61bn, with the net profit margin increasing 330bps YoY to 27.9%

During the quarter, Google brought in 26.64 billion dollars from operating activities, down yearly mostly due to a previous deferral of income taxes, which was paid now. Otherwise, net income increase would provide a decent proxy of how things went. On the other hand, capital expenditures almost doubled YoY to 13.18 billion. Management had spoken about this occurring. This puts free cash flow at 13.4 billion.