Alphabet Inc.

Welcome, everyone. Thank you for standing by for the Alphabet fourth quarter and fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. I would now like to hand the conference over to your speaker today, Jim Freeland, Senior Director of Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Alphabet's fourth quarter 2024 earnings conference call. With us today are Sundar Pichai, Philip Schindler, and Anat Ashkenazi. Now, I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. 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 forward slash investor. Our comments will be on year-over-year comparisons unless we state otherwise. And now, I'll turn the call over to Sundar.

Thanks, Jim, and hello, everyone. We delivered another strong quarter in Q4, driven by our leadership in AI and our unique full-stack approach. We are making dramatic progress across compute, model capabilities, and in driving efficiencies. We are rapidly shipping product improvements and seeing terrific momentum with consumer and developer usage. And we are pushing the next frontiers from AI agents, reasoning and deep research to state-of-the-art video, quantum computing and more. The company is in a great rhythm and cadence, building, testing and launching products faster than ever before. This is translating into product usage, revenue growth and results. In search, AI overviews are now available in more than 100 countries. They continue to drive higher satisfaction and search usage. Meanwhile, Circle to Search is now available on over 200 million Android devices. In cloud and YouTube, we said at the beginning of 2024 that we expected to exit the year at a combined annual revenue run rate of over $100 billion. We met that goal and ended the year at a run rate of $110 billion. We are set up well for continued growth. So today I'll provide an update on our AI progress and how it's improving our core consumer products. Then I'll touch on cloud, YouTube, platforms and devices, and Waymo. Let's start with AI. Last quarter, I outlined the three areas of our differentiated full-stack approach to AI innovation. Our leading AI infrastructure, our world-class research, including models and tooling, and our products and platforms that bring these innovations to people at scale. First, AI infrastructure. Our sophisticated global network of cloud regions and data centers provides a powerful foundation for us and our customers, directly driving revenue. We have a unique advantage because we develop every component of our technology stack, including hardware, compilers, models, and products. This approach allows us to drive efficiencies at every level, from training and serving to developer productivity. In 2024, we broke ground on 11 new cloud regions and data center campuses in places like South Carolina, Indiana, Missouri, and around the world. We also announced plans for seven new subsea cable projects, strengthening global connectivity. Our leading infrastructure is also among the world's most efficient. Google data centers deliver nearly four times more computing power per unit of electricity compared to just five years ago. These efficiencies, coupled with the scalability, cost, and performance we offer, are why organizations increasingly choose Google Cloud's platform. In fact, today, cloud customers consume more than eight times the compute capacity for training and inferencing compared to 18 months ago. We'll continue to invest in our cloud business to ensure we can address the increase in customer demand. Second, world-class research, including models. In December, we unveiled Gemini 2.0, our most capable AI model yet, built for the agent tech era. We launched an experimental version of Gemini 2.0 Flash, our workhorse model with low latency and enhanced performance. Flash has already rolled out to the Gemini app, and tomorrow we are making 2.0 Flash generally available for developers and customers, along with other model updates. So stay tuned. Late last year, we also debuted our experimental Gemini 2.0 flash thinking model. The progress to scale thinking has been super fast and the reviews so far have been extremely positive. We are working on even better thinking models and look forward to sharing those with the developer community soon. Gemini 2.0's advances in multimodality and native tool use enable us to build new agents that bring us closer to our vision of a universal assistant. One early example is deep research. It uses agentic capabilities to explore complex topics on your behalf and give key findings along with sources. It launched in Gemini Advanced in December and is rolling out to Android users all over the world. We are seeing great product momentum with our consumer Gemini app, which debuted on iOS last November. And we've opened up trusted tester access to a handful of research prototypes, including Project Mariner, which can understand and reason across information on a browser screen to complete tasks, and Project Astra. We expect to bring features from both to the Gemini app later this year. We're also excited by the progress of our video and image generation models. VO2, our state-of-the-art video generation model, and Imagine 3, our highest quality text-to-image model. These generative media models, as well as Gemini, consistently top industry leaderboards and score top marks across industry benchmarks. That's why more than 4.4 million developers are using our Gemini models today, double the number from just six months ago. and we continue to drive research breakthroughs in quantum computing. At the end of last year, we announced Willow, our new state-of-the-art quantum computing chip that can reduce errors exponentially as we scale up using more qubits. Willow is an important step in our journey to build a useful quantum computer with practical applications. This technology holds so much promise, which is why there was real excitement around this breakthrough. Third, our products and platforms put AI into the hands of billions of people around the world. We have seven products and platforms with over 2 billion users and all are using Gemini. That includes search where Gemini is powering our AI overviews. People use search more with AI overviews and usage growth increases over time as people learn that they can ask new types of questions. This behavior is even more pronounced with younger users who really appreciate the speed and efficiency of this new format. We are also pleased to see how Circle to Search is driving additional search use and opening up even more types of questions. This feature is also popular among younger users. Those who have tried Circle to Search before now use it to start more than 10% of their searches. As AI continues to expand the universe of queries that people can ask, 2025 is going to be one of the biggest years for search innovation yet. Now, let me turn to key highlights from the quarter across cloud, YouTube, platforms and devices, and way more. First, Google Cloud. Our AI-powered cloud offerings enabled us to win customers such as Mercedes-Benz, MercadoLibre, and Servier. In 2024, the number of first-time commitments more than double compared to 2023. We also deepen customer relationships. Last year, we closed several strategic deals over $1 billion and the number of deals over 250 million doubled from the prior year. Our partners are further accelerating our growth with customers purchasing billions of dollars of solutions through our cloud marketplace. We continue to see strong growth across our broad portfolio of AI-powered cloud solutions. It begins with our AI hypercomputer, which delivers leading performance and cost across both GPUs and TPUs. These advantages help Citadel with modeling markets and training and enabled Wayfair to modernize its platform, improving performance and scalability by nearly 25%. In Q4, we saw strong uptake of Trillium, our sixth generation TPU, which delivers four times better training performance and three times greater inference throughput compared to the previous generation. We also continue our strong relationship with Nvidia. We recently delivered their H200 based platforms to customers. And just last week, we were the first to announce a customer running on the highly anticipated Blackwell platform. Our AI developer platform, Vertex AI, saw a 5X increase in customers year over year, with brands like Mondelez International and WPP building new applications and benefiting from our 200 plus foundation models. Vertex usage increased 20X during 2024, with particularly strong developer adoption of Gemini Flash, Gemini 2.0, Imagine 3, and most recently, Veo. We're also seeing strong growth in our AI-powered databases, data analytics, and cybersecurity platforms. Customers, including Radisson Hotels, are now using Gemini to search and analyze multimodal data from across multiple clouds. Our AI-powered threat intelligence and security operations products help customers, including Waterphone and AstraZeneca, identify, protect, and defend against threats. Our growing portfolio of AI applications is also seeing strong customer adoption. In Q4, we introduced Google Agent Space, which helps enterprises synthesize data with Google quality search, create Gemini-powered agents, and automate transactions for employees. In addition, we recently gave all Google Workspace business and enterprise customers access to all of our powerful Gemini AI capabilities to help boost their productivity. Moving to YouTube, needs and data shows YouTube continues to be number one in streaming watch time in the US with our share of streaming now at a record high. On election day alone, over 45 million viewers across the US watched election related content on YouTube. Our early investment in podcasts is paying off. We integrated podcasts into the core YouTube experience, particularly with video. We are now the most frequently used service for consuming podcasts in the US, according to a recent Edison report. This success reflects our long-term approach of investing in emerging trends from mobile to the living room. We now have over 250,000 creators in the YouTube shopping affiliate program in the US and Korea alone. We expand YouTube shopping at the end of last year to three additional countries, allowing even more creators to share their favorite products with fans and grow their businesses. Philip will talk more about YouTube performance later in the call. Next, platforms and devices. Google One's performance has been outstanding and is one of our fastest growing subscription products in terms of subscribers and revenue growth. Last month, we announced the first beta of Android 16 plus new Android updates, including a deeper Gemini integration coming to the new Samsung Galaxy S25 series. We also recently announced Android XR, the first Android platform built for the Gemini era. Created with Samsung and Qualcomm, Android XR is designed to power an ecosystem of next-generation extended reality devices like headsets and glasses. Finally, a few words on Waymo, which made tremendous progress last year. safely serving more than 4 million passenger trips. It's now averaging over 150,000 trips each week and growing. Looking ahead, Waymo will be expanding its network and operations partnerships to open up new markets, including Austin and Atlanta this year and Miami next year. And in the coming weeks, Waymo One vehicles will arrive in Tokyo for their first international road trip. We are also developing the sixth generation Waymo driver, which will significantly lower hardware costs. I want to thank our employees around the world for another great quarter. 2025 is going to be exciting, and we are all ready for it. Philip, I'll hand it over to you.