Alphabet Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Alphabet Third Quarter 2020 Earnings Conference Call. At this time, all participants 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 then 1 on your telephone. If you require any further assistance, please press star then 0. I'd now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Alphabet's third quarter 2020 earnings conference call. With us today are Sundar Pichai and Ruth Porat. Now I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business operations and financial performance, including the effect of the COVID-19 pandemic on those areas, 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 and in our form 10-Q for the quarter ended September 30th, 2020, expected to be filed with the SEC later today. 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. Given the busy schedule this afternoon, we've shortened our opening remarks so that we can move more quickly to take your questions. And now, I'll turn the call over to Sundar.

Thank you, Jim, and good afternoon, everyone. Thanks for joining us today. This quarter, our performance was consistent with the broader online environment. It's also testament to the investment we have made to improve surge and deliver a highly relevant experience that people turn to for help in moments big and small. We saw an improvement in advertiser spend across all geographies and most of our verticals. With the world accelerating its transition to online and digital services, in Q3, we also saw strength in Google Cloud, Play, and YouTube subscriptions. This is the third quarter we are reporting earnings during the COVID-19 pandemic. Access to information has never been more important. This year, including this quarter, showed how valuable Google's founding product, Search, has been to people. And importantly, our products and investments are making a real difference as businesses work to recover and get back on their feet. Whether it's finding the latest information on COVID-19 cases in their area, which local businesses are open, or what online courses will help them prepare for new jobs, people continue to turn to Google Search. You can now find useful information about offerings like no-contact delivery or curbside pickup for 2 million businesses on search and maps. And we have used Google's duplex AI technology to make calls to businesses and confirm things like temporary closures. This has enabled us to make 3 million updates to business information globally. We know that people's expectations for instant perfect search results are high. That's why we continue to invest deeply in AI and other technologies to ensure the most helpful search experience possible. Two weeks ago, we announced a number of search improvements, including our biggest advancement in our spelling systems in over a decade, a new approach to identifying key moments in videos, and one of people's favorites, Hum2Search, which will identify a song and artist based only on humming. We also announced that Bird, A huge breakthrough in natural language understanding that we introduced last year now improves results for almost every English search query. We are also investing in improving the shopping experience in search to help people find the best products and prices available from a wide range of merchants. We recently added easy-to-see price comparisons to help consumers know if they are getting a good deal. We have also improved our features like price tracking so people can request an alert if there is a discount on a product they are following. These investments are also benefiting merchants and advertisers and helping them recover. As of today, merchants can list products for free on a shopping tab in 48 countries around the world. For advertisers, we recently announced a new insights page in Google Ads to help businesses better understand consumer trends and track current search demand for products or services. We're also investing to create improved search experiences that provide additional value to news publishers. We recently committed $1 billion in investments that include licensing content from national, regional, and local news publishers for Google News Showcase, a new product that features the editorial curation of award-winning newsrooms. We have signed partnerships with nearly 200 publications around the world with more to come. We know our success in search is not guaranteed. We are proud that people choose Google Search, not because they have to, but because it's helpful. We remain committed to investing to build the most helpful, most trusted search experience just we have for the last 22 years. On that note, regarding the DOJ's lawsuit, we believe that our products are creating significant consumer benefits and will confidently make our case. Our company's focus remains on continuing our work to build a search product that people love and value. Moving on to other parts of our business this quarter. In hardware, we highlighted some great new products available for the holidays. Our new Pixel phones bring together the very best of Google's hardware, software, and AI at an affordable price with new camera and assistant features. And our latest Chromecast now comes with Google TV, which brings together movies, shows, and live TV from across apps and subscriptions and organizes them for you. We are pleased with the positive reviews, and we have a terrific product roadmap ahead. On to YouTube. People come to YouTube for entertainment, information, and opportunities to learn something new. As a sign of the times, views for guided meditation videos are up 40% since mid-March, while DIY face mask tutorials have been viewed over 1 billion times. YouTube subscriptions also continue to grow. YouTube now has over 30 million music and premium paid subscribers, and over 35 million, including those on free trials. YouTube TV now has more than 3 million paid subscribers. Next, cloud. Three trends are driving the continued momentum of our cloud business. First, as the shift to digital accelerates, Google Cloud continues to provide a foundation for data processing and analytics, one of the fastest growing segments of the market. BigQuery, which provides real-time and predictive analytics, is winning retailers like Best Buy, helping them create better experiences for shoppers. Customers value our differentiated AI ML-based industry-specific solutions. This is leading to significant events with brands like Unilever, Amwell, and Rekit Bankiza. Additionally, we are working with government agencies like the U.S. Navy to modernize maintenance operations for vessels and facilities. We are also partnering with the Defense Innovation Unit, part of the U.S. Department of Defense, to help military doctors with cancer detection research. And recently, we signed an enterprise agreement with the U.S. Department of Energy to help scale research efforts and innovate across national labs and field sites. Second, customers are increasingly moving to the cloud to drive efficiencies and lower IT costs. A strength in multi-cloud is an advantage here. This is helping us win large data center and IT transformation deals like Nokia, which recently announced it's migrating and modernizing approximately 30 data centers across 12 countries onto Google Cloud. And third, the future of work is creating a more collaborative world. Customers are looking to support hybrid work environments, and we are seeing significant growth in demand. Earlier this month, we announced Google Workspace, which brings together all of our communication and collaboration apps and ensures they work better together. This is helping organizations like the state of West Virginia and shipping company Ocean Network Express improve collaboration and productivity for their employees. Google Workspace continues to grow. For example, Google Meet saw a peak in Q3 of 235 million daily meeting participants and more than 7.5 billion daily video call minutes. Finally, in our other bets, Waymo announced that its fully autonomous ride-hailing service in suburban Phoenix will open to the public, making it the only company to offer a fully autonomous service for riders. Waymo also entered into a strategic global partnership with Daimler Trucks to enable fully autonomous trucking. Before I close, I want to reiterate our four key areas of focus, which you've heard me talk about all year. First, creating the most helpful products for everyone. Our investments in search, maps, and shopping that I discussed earlier, as well as YouTube, are prime examples. Second, providing the most trusted experiences for our users. We continue to work hard to keep users safe and put them in control of their information. Every day, Gmail blocks more than 100 million phishing attempts, and Google Play Protect scans over 100 billion apps for malware and other issues. Third, executing at scale productively, securely, and collaboratively. And finally, creating sustainable value, which means creating financially viable and self-sustaining products. Before I hand over to Ruth, one important update. Starting with the results for the fourth quarter of 2020, we'll break out Google Cloud as a separate reporting segment. I'm working with Ruth and Thomas Kurian to make investment decisions to drive progress here. As we have told you on these calls, given the progress we are making and the opportunity for Google Cloud in this growing global market, we continue to invest aggressively to build our go-to-market capabilities, execute against our product roadmap, and extend the global footprint of our infrastructure. With this segmentation, you will additionally see information about the scale of our investments, which should help you gauge the progress we are making on the multi-year path ahead to create sustainable value. Thanks to all the Googlers around the world for everything you're doing to help our users and partners. I hope everyone stays safe, and let me reiterate my gratitude to essential workers, healthcare providers, first responders, teachers, and scientists everywhere. With that, I'll now turn it over to Ruth.