Alphabet Inc.

Welcome, everyone. Thank you for standing by for the Alphabet's second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would 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 second quarter 2021 earnings conference call. With us today are Sundar Pichai, Philip Schindler, and Ruth Peratt. 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. 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.investor. And now, I'll turn the call over to Sundar.

Thank you, Jim, and good afternoon, everyone. It's good to be with you. Today, I'll give an overview of the quarter, going through some of our product momentum, then touching on cloud and YouTube. First, I want to acknowledge that the new COVID-19 variants have been challenging for so many communities across the world. As the pandemic evolves, we want to help people get the information they need to keep themselves and their families safe. I really encourage everyone to get the vaccine when it's available to you. Turning to the quarter, we saw a rising tide of online consumer and business activity. We are proud that our services help so many businesses and partners. In fact, we set a number of records this quarter. This quarter, publisher partners earn more than they ever have from our network. We also paid more to YouTube creators and partners than in any quarter in our history. And on top of that, over the past year, we have sent more traffic to third-party websites than any year prior, in addition to generating billions of direct connections, like phone calls, directions, ordering food, and making reservations that drove customers and revenue to businesses around the world that are working to get back on their feet. A few years ago, we placed a bet on AI, believing that it would be a fundamental technology that would underpin and dramatically improve all our products. That vision was on full display at our IO event in May, where we announced new advancements that will be helpful to people and businesses everywhere. As one example, we introduced Multitask Unified Models, or MUM. MUM is a big advancement in search. a thousand times more powerful than our current systems. It has the ability to learn and transfer knowledge across 75 languages, which means that it can learn from sources in one language and help bring that information to you in another. We also announced a new AI system called Lambda that achieves a new level of natural conversation capabilities. We think Lambda will help make information and computing more accessible, and we are excited about this early stage research. And last week, DeepMind shared its new AlphaFold protein structure database, which doubled the number of high-accuracy human protein structures available to researchers. In the coming months, it will include almost every sequence protein known to science. Turning to Android, we previewed Android 12 at Google I.O. The latest version will include new ways to personalize devices and significantly improve speed and power efficiency. We have built new privacy protections directly into the OS, such as the new privacy dashboard to help people keep information safe and private. Android 12 will, of course, be central to Google's own devices. I'm very excited by our fall lineup, which will showcase Android 12 and some of the deep technology investments that are helping us push boundaries. Pixel remains at the heart of that long-term strategy and I'm proud of how the team continues to deliver the best of Google through our family of helpful devices, including Nest and Fitbit. You can see all of these devices at our first retail store in New York City, and I'm looking forward to seeing some new ones there soon. We're also seeing developers getting tremendous benefit from Google Play. Through the end of Q2, over $120 billion has been earned cumulatively by developers around the world from Google Play. Let me talk a bit more about cloud. Q2 revenue grew 54% year over year. Our innovative products, focused go-to-market strategy, and growing ecosystem are driving our momentum. Organizations across industries are choosing Google Cloud as their platform for digital transformation, including SAP customers like PayPal, Johnson Controls, and Whirlpool. who have deployed SAP environments on Google Cloud. This quarter, we saw three distinct trends. First, the increase in cyber and ransomware attacks is a wake-up call for the industry. Over two decades, Google has built some of the most secure computing systems in the world. And we are proud that our Google Cloud customers can benefit from our experience here. Customers like Major League Baseball are partnering with Google Cloud to further enhance their security program. We pioneered the Zero Trust approach, an architecture that builds in multiple layers of defense against unauthorized access. This approach and other security solutions help customers minimize the impact of cyber attacks and prevent them completely. At our Cloud Security Summit last week, we announced new solutions across our portfolio of products. BT is bringing our new security operations solutions based on Chronicle to the managed security services market. And Adobe in the state of Wisconsin are helping protect users with our fraud detection product. Second, our expertise in real-time data and analytics continues to differentiate us in the data cloud, one of the fastest growing segments of the market. BigQuery is not only a data warehouse, it's a platform for customer innovation. And it's helping drive our strong year-over-year growth with customers like HCA Healthcare, who will be using BigQuery to analyze data to improve clinical care. Additionally, our deep expertise in AI and machine learning remains a key differentiator, winning customers like Group Casino and leading to partnerships with industrial automation leaders like Siemens. Our focus on delivering industry-specific solutions coupled with our secure open cloud infrastructure enable us to support leading telecommunications companies such as Reliance Jio, Telecom Italia Tim, and Ericsson to work together on applications and new solutions for 5G networks and mobile edge computing. These join existing customers, Vodafone, Telus, and many others. Google Workspace continues to show strong growth, particularly in the enterprise space, because we have designed the product to meet the challenges of hybrid work. This includes the announcements we made at I.O. about Smart Canvas, as well as expanding our advanced security and compliance capabilities and solutions for frontline workers. These innovations are landing wins with companies like Carvana, the online auto retailer, and software company Red Hat. Turning next to YouTube, YouTube Shorts continues to gain momentum. We've been rolling it out everywhere YouTube is available in more than 100 countries worldwide. I'm proud to announce that YouTube Shorts has just surpassed 15 billion daily views. Also pleased with the progress we are making with YouTube subscription products across music, premium, and YouTube TV, each delivering a fantastic experience and content for viewers. And finally, Waymo continues to build and commercialize the Waymo driver and grow the team. People love the fully autonomous ride-hailing service in Phoenix. Since first launching its services to the public in October 2020, Waymo has safely served tens of thousands of rides without a human driver in the vehicle, and we look forward to many more. Before I close, let me call out our continued work on sustainability. which has been a core value for us since our founding. As you'll recall, we were the first to announce an ambitious goal that will be transformative for the industry. We aim to operate on 24-7 carbon-free energy by 2030. In Q2, we announced that five of our data centers are already operating at or near 90% carbon-free energy. To help us reach our target everywhere, we implemented a system to shift flexible computing tasks to different times and places with greater availability of carbon-free energy. And we are working to enable geothermal power in more places starting in Nevada next year. I want to thank all our employees around the world for their contributions to a great quarter. I know it's been a challenging 18 months. Through it all, taking care of everyone in our workforce has remained a top priority. Now we are reimagining the future of work with flexibility as a guiding principle. I was excited to see so many people in person as we started a voluntary return to our California offices recently. As we make our way back, we are giving employees more flexibility in how and where they work, and we'll continue to invest in our sites in the U.S. and elsewhere. Over to Philip.