Google instant street view3/16/2023 Google's research efforts into smart homes (i.e. Waymo) is a huge expense, but could open huge revenue opportunities many years down the road. For example, Google's autonomous vehicle technologies (i.e. And despite the fact that this segment is a loss leader (it makes no money) it could open massive opportunities down the road. The Other Bets Segment is constantly innovating with technology. We expect Google Cloud to keep growing rapidly (which is a good thing) but not enough to overtake AWS or Azure (which are also growing rapidly and have a big head start on Google). Google has some strong advantages in this area (stemming from its many years of internal cloud development), however Google Cloud is still the number three player behind Amazon Web Services and Microsoft Azure. Google Cloud Services has been growing (even faster than Google Services), and is expected to keep growing as the global digital revolution and cloud migration are still just getting started. And further still, the success of Google's YouTube's continues to grow as its contributions to the top and bottom line continue to improve. Also (per StatCounter), Google's Chrome browser remains the market leader with roughly two-thirds of total market share as compared to 19% for Apple's Safari and 4% for Microsoft's Edge ( MSFT). Google's biggest operating segment).įurther, more than 90% of global searches are conducted through Google, thereby giving the company access to enormous data valuable to advertisers. This gives Google a massive competitive advantage in gathering information about users that is extremely valuable to advertisers (i.e. "Most Android devices ship with additional proprietary software pre-installed most notably Google Mobile Services which includes core apps such as Google Chrome, the digital distribution platform Google Play, and associated Google Play Services development platform." This is so important because, according to Wikipedia: Google Services (Advertising) Segment: According to IDC, Google's Android operating system is behind more than 70% of smartphones in the world, as compared to Apple iOS ( AAPL) at ~27%. These are powerful growth rates (especially for a massive $1+ trillion company) and they are driven by the massive secular trends of digitization, cloud migration and smart device usage (which are still be in the early innings of growth).Īnd to give you some perspective on Google's massive ecosystem (which is basically the driver of its competitive moat versus competitors) here are a few key points to consider, by operating segment: More specifically, forward revenue estimates project a double-digit growth rate and a double-digit EBITDA growth rate. Google's massive revenues (see above) are expected to keep growing rapidly, as you can see in the following chart. Statista Revenue Growth and Competitive Advantages Revenues from Other Bets are generated primarily from the sale of health technology and internet services.Īnd to be clear, advertising has been the main source of revenue for years. Other Bets: is a combination of multiple operating segments that are not individually material. Google Cloud generates revenues from fees received for Google Cloud Platform services, Google Workspace collaboration tools, and other enterprise services. Google Cloud: includes Google's infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Services generates revenues primarily from advertising sales of apps and in-app purchases, digital content products, and hardware and fees received for subscription-based products such as YouTube Premium and YouTube TV. Google Services: includes products and services such as ads, Android, Chrome, hardware, Google Maps, Google Play, Search, and YouTube. Google breaks its business down into three operating segments, and if you don't know "Google Service" (which is basically advertising) generates the lion's share of the revenue and basically all of the profits, as you can see in the following 10-Q excerpts.įor your information, and to be specific, Google defines its three operating segments as follows: We conclude with our strong opinion on investing. In this report, we review Google's business model, revenue growth drivers, capital allocation, current valuation and big risks. This is a company that has over 10% revenue growth, a seemingly insurmountable ecosystem and moat, and now trades at only 10 times forward EV to EBITDA. Stalwart, blue-chip, US stock market juggernaut, and Google parent, Alphabet ( NASDAQ: GOOG) ( NASDAQ: GOOGL), made a new 52-week low this week.
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