Pixel 9 sales help drive Alphabet's strong Q3, and the Google Maps app joins a special club
Google parent Alphabet released its third-quarter earnings on Tuesday. Before we get into those numbers, during the conference call after the report was released, Alphabet and Google CEO Sundar Pichai said that Google Maps was "the latest product to surpass the 2 billion user milestone." That brings to seven the number of Google apps that have over two billion users. Besides Maps, the previous six include Search, Gmail, Android, Chrome, Play Store, and YouTube.
All seven of these apps, including Google Maps, have, according to CEO Pichai, "done their first versions of incorporating Gemini, and there's an aggressive roadmap ahead for 2025." During the call, it was also revealed that over 25% of all new code at Google is written by AI and then reviewed by Google engineers. As Pichai notes, "This helps our engineers do more and move faster."
The Circle to Search feature that performs a Google Search on an item circled on a device screen is now on 150 million Android devices. CEO Pichai goes a little deeper to note that Android users employ the feature "to shop, translate text, and learn more about the world around them." The executive adds that, "A third of the people who have tried Circle to Search now use it weekly, a testament to its helpfulness and potential." Interestingly, Circle to Search is employed the most by users in the 18 to 24 age bracket.
"The momentum across the company is extraordinary. Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools.
We generated strong revenue growth in the quarter, and our ongoing efforts to improve efficiency helped deliver improved margins. I’m looking forward to driving more advances for consumers, customers and creators globally."-Sundar Pichai, CEO, Alphabet and Google
In Search, our new AI features are expanding what people can search for and how they search for it. In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals. And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time.
During the third quarter, Google's advertising revenue rose to $65.9 billion from $59.6 billion during the same quarter last year. That 11% year-over-year gain was helped by a 12.3% annual gain in Google Search ad revenue to $49.4 billion, and a 14% increase in YouTube ad revenue to $8.9 billion. The Pixel 9 series appeared to help propel a 29% gains in the category marked "Google subscriptions, platforms, and devices" to $10.7 billion in revenue.
Total revenue for the quarter amounted to $88.3 billion which was 15% above last year's Q3 gross of $76.7 billion. The costs laid out to acquire traffic rose 8.7% on an annual basis to $13.7 billion during Q3 while the headcount shrunk to 181,269 from 182,381, a less than 1% decline. Net income for Q3 rose a strong 34% to $26.3 billion from $19.7 billion last year. Diluted earnings per share , which imagines that all convertible instruments and options are converted to stock, was reported at $2.12 from $1.55 for a 37% gain.
Investors liked the strong report with Alphabet shares (GOOG) rising $10.08 (5.89%) in after-hours trading to $181.22 following the release of the Q3 results.
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