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Alphabet (GOOG) Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 21, 2016 4:30 pm ET

Executives

Ellen West - Vice President-Investor Relations, Google, Inc.

Ruth Porat - Chief Financial Officer & Senior Vice President

Sundar Pichai - Chief Executive Officer, Google, Inc.

Analysts

Eric J. Sheridan - UBS Securities LLC

Carlos Kirjner-Neto - Sanford C. Bernstein & Co. LLC

Ross Sandler - Deutsche Bank Securities, Inc.

Mark Mahaney - RBC Capital Markets LLC

Heather Bellini - Goldman Sachs & Co.

Douglas T. Anmuth - JPMorgan Securities LLC

Steve D. Ju - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Daniel Salmon - BMO Capital Markets (United States)

Justin Post - Bank of America Merrill Lynch

Anthony DiClemente - Nomura Securities International, Inc.

Brian Nowak - Morgan Stanley & Co. LLC

Ben Schachter - Macquarie Capital (USA), Inc.

Colin A. Sebastian - Robert W. Baird & Co., Inc. (Broker)

Operator

Good day, ladies and gentlemen. And welcome to the Alphabet, Inc. First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

I will now like to turn the conference over to Ms. Ellen West, head of Investor Relations. Please go ahead.

Ellen West - Vice President-Investor Relations, Google, Inc.

Thank you. Good afternoon, everyone, and welcome to Alphabet's first quarter 2016 earnings conference call. With us today are Ruth Porat and Sundar Pichai. Some of the statements that we make today may be considered forward-looking, including statements regarding our future investments, our long-term growth and innovation, the expected performance of our businesses and our expected level of capital expenditures. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. For more information, please refer to the risk factors discussed in our Form 10-K for 2015 filed with the SEC.

Any forward-looking statements that we make are based on assumptions as of today, and we undertake no obligation to update them. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. As you know, we distribute our earnings release through our Investor Relations website located at abc.xyz/investor. This call is also being webcast from our IR website, where a replay of the call will be available later today.

And now, I'll turn the call over to Ruth.

Ruth Porat - Chief Financial Officer & Senior Vice President

Thanks. Our very strong revenue of $20.3 billion in Q1 underscored the great momentum of our businesses globally, with consolidated revenue growth again accelerating meaningfully, up 23% in constant currency versus last year.

The primary driver was the increased use of Mobile Search by consumers, benefiting from our ongoing efforts to enhance the Mobile Search experience. We also benefited from solid growth in desktop and tablet search as well as continued strength in YouTube and programmatic advertising.

We continue to rationalize our portfolio of products to ensure we efficiently and effectively focus our resources behind our biggest bets across Alphabet. I will present to you in the following order: first, review the quarter on a consolidated basis for Alphabet; second, review the results for each of Google and Other Bets; finally, I will conclude with our outlook. Sundar will then review our business and product highlights for the quarter, after which we will take your questions.

Beginning with a summary of Alphabet's consolidated financial performance, total revenue was $20.3 billion, up 17% year-over-year and down 5% sequentially. As a result of the ongoing strength of the U.S. dollar, we realized a negative currency impact on our revenues year-over-year of $762 million or $593 million after the benefit of our hedging program. Holding currency constant to prior periods, our total revenue grew 23% year-over-year and declined 4% sequentially, reflecting holiday seasonality.