Alphabet Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Alphabet 3rd Quarter 2019 Earnings Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then 1 on your telephone. If you require any further assistance, please press star and then 0. I'd now like to hand the conference over to your speaker today.

Ellen West, Head of Investor Relations. Please go ahead. Thank you. Good afternoon, everyone, and welcome to Alphabet's third quarter 2019 earnings conference call. With us today are Sundar Pichai and Ruth Peratt. Now I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business performance and operations and our expected level of capital expenditures may be considered forward-looking. and such 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 most recent Form 10-K filed with the SEC. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website, located at abc.xyz slash investor. And now I'll turn the call over to Sundar.

Thank you, Ellen, and good afternoon. Q3 was another great quarter at Google, with strong revenue growth driven by mobile search, YouTube, and cloud. We celebrated Google's 21st birthday this quarter. While our mission to organize the world's information and make it universally accessible and useful hasn't changed, We've evolved from a company that helps people find answers to a company that helps you get things done. Since the beginning, we've always invested in tackling deep computer science problems that can have a significant impact on society. The chance to be part of these fundamental engineering challenges is why so many people want to work at Google. In just the last week, we've announced two significant advances. First, powered by our long-term investment in AI, We dramatically improved our understanding of the questions people ask Google Search. It's the biggest leap forward for search in the past five years. It's all possible because of a new type of neural network-based technique for natural language processing called BERT, which recognizes subtle patterns in language and provides more relevant results. Second, we recently announced a major quantum computing milestone. I was extraordinarily proud to visit our team in Santa Barbara. To demonstrate supremacy, Google's 53-qubit quantum machine Sycamore successfully performed a test computation in just 200 seconds that would have taken the most powerful supercomputers much longer time to accomplish. It's the hollow world moment we've been waiting for and represents a distinct milestone in our effort to harness the principles of quantum mechanics to solve computational problems. Turning from quantum to the quarter. Today, I'll talk about the momentum we saw across the business in the last three months. First, cloud. We saw customer momentum across multiple areas under Thomas' leadership. In September, we announced a landmark partnership with Mayo Clinic. Using Google Cloud to secure and store data and understand insights at scale, Mayo Clinic will partner with us in many ways. Together, we'll work to transform patient and clinician experiences, identify new methods of diagnosing diseases, conduct clinical research, and find new models for delivering patient care. National Australia Bank recently added Google Cloud to its multi-cloud strategy to help the company better use data and deliver new and improved customer experiences. Deutsche Börse Group, the fourth largest stock exchange group worldwide, relies on Google Cloud to help them navigate the twin challenge of modernizing their digital operations and addressing significant regulatory requirements. Retailers are also turning to cloud solutions to help make the shopping experience as seamless and personalized as possible. For example, Macy's uses Google Cloud to streamline their operations from the distribution center to the shop floor. Public sector customers are modernizing their IT systems with Google Cloud with great results. For example, the state of Arizona already has more than 36,000 employees using our products to increase productivity, efficiency, and security. And this quarter, it further extended our relationship. We continue to extend our cloud services through partners, including a new solution that enables customers to run VMware workloads on GCP for the first time. We announced a cloud region in Nevada. When it launches in 2020, it will be our seventh cloud region in the U.S. We also announced a new cloud region in Poland, our seventh in Europe. Turning to Google's products that people use every day. We are excited about new features launched in Maps, including detailed voice guidance while walking that will make it possible for people who have vision impairments or are blind to get around more easily. new tools that will allow users to see all of their flight and hotel reservations in one place, and another new feature that gives transit riders in 30 countries the ability to see ride-sharing and biking options near their bus or train stop. In Search, we made a number of improvements to make it easier for users to find key moments in videos, easily find products within images via Google Lens, and discover new podcasts. Our hardware business is still in its early stages, but we are continuing to build a business and a portfolio of helpful products. Two weeks ago, we unveiled our new made-by-Google product lineup, bringing together the best of hardware, software, and AI. Our new Pixel 4 and Pixel 4 XL are the first phones with motion sense. This allows users to use natural gestures to get things done without touching their phones. The new Google Assistant now gives users the ability to switch seamlessly between apps, all by voice. And the new Pixelbook Go provides many of the great features of our premium Pixelbook at a more affordable price point. We also unveiled the new, more powerful Nest Mini speaker and Nest Wi-Fi. Finally, the team is looking forward to launching Pixel Buds, our first truly wireless headphones, as well as Stadia, our streaming gaming platform, which will soon be available in the US, UK, Canada, and throughout Europe. We are encouraged by the positive product reviews so far. With the holidays coming up, I think there's a gift for everyone on your list. On to YouTube. Keeping YouTube safe for our users, creatives, and partners while preserving the openness of our platform is our top priority. This quarter, we continue to update our community guidelines and enforcement to protect users from harmful content and will keep doing this work. YouTube Music and YouTube Premium continue to expand globally and are now available in 71 countries. In September, YouTube launched its new fashion and beauty destination called YouTube Slash Fashion. It's designed to meet the growing demand from consumers for better ways to explore and connect with some of YouTube's biggest fashion and beauty creators. And I want to emphasize that as we build all these helpful products, we are committed to giving users more control of their data. This quarter, we extended one of our most popular features in Chrome and YouTube called Incognito Mode to Maps. We expanded our auto-delete controls to YouTube history. These controls already enable people to set their location history and web and app activity to be deleted automatically after three or 18 months. And to protect everyone's safety online, we introduced password checkup. It's a new feature that tells users if any of their passwords are weak, if they've been reused across multiple sites, or if they've been compromised somewhere on the web. Now, moving on to how we are helping advertisers. We are bringing our strengths in machine learning to help advertisers build their ad campaigns. Machine learning power tools like search auto bidding are gaining traction. In fact, more than half of advertisers' search spend is now optimized via full auto bidding. We now have more than a million advertisers using responsive search ads, an ad format we launched a year ago that uses machine learning to create the right ad for each search query. And our new video reach campaigns allow marketers to upload multiple video ads into a single campaign. From there, we used machine learning to serve the most efficient combination of these ads to help brands reach audiences at scale. This quarter, we expanded inventory for our very popular app campaigns to include new surfaces, including YouTube search, display video ads, and the Discover feed. We also launched YouTube Masthead ads for TV, which enable advertisers to reach audiences right when they open the YouTube app on their connected TVs. one of its fastest-growing screens. It's also important for advertisers to have standardized measurement that's fair across all media and that delivers insights in a way that fully protects users' privacy. We're making it easier for businesses to do just that. Our next generation of Google Analytics unifies web and app measurement reporting for the first time to help businesses understand which channel is driving the best results. On a personal note, I was in Dallas in October where I saw firsthand how important Google is in helping small and medium-sized businesses grow. I got to visit Peacock Alley, a bedding and bath manufacturer in Dallas with 75 employees. They've been using Google Ads for over 15 years to help drive traffic to their stores. Their e-commerce has grown 52% in the past year. They credit the guidance Google Analytics provides as well as Google Shopping and product listing ads for that growth. This isn't the only way we help small businesses grow and thrive. Our Grow with Google program has helped train 3 million Americans in digital skills, including small business owners and entrepreneurs. Just a few weeks ago, we announced that our IT Professional Support Certificate training course will expand to 100 community colleges. It's already helped tens of thousands of people pursue fast-growing, well-paying careers in IT support. I'm glad to see more community colleges offer this pathway to students. Finally, to round out a busy quarter, sustainability has always been a core value for us, and I'm proud that we've been carbon neutral since 2007. In September, we announced the biggest corporate purchase of renewable energy in history. we are increasing Google's existing renewable energy portfolio by more than 40%. These purchases are happening globally, spurring the construction of more than $2 billion in new energy infrastructure, including millions of solar panels and hundreds of wind turbines across three continents. And at our hardware event, we announced that we are committing to roughly $150 million in renewable energy projects in key manufacturing regions. Our hope is that this will spur even greater investments in sustainability. So it's been a really great quarter. A personal highlight for me was our Take Our Parents to Work Day, which we held in September at our main campus in Mountain View. It was great to see thousands of parents take such pride in what their kids are building. I feel the same way. None of our work would be possible without our Googlers around the world. This quarter was another great example of the mission that brings us all together. Thank you. Now, I'll turn it over to Ruth.