Alphabet Inc.

Welcome, everyone. Thank you for standing by for the Alphabet's second quarter 2025 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 Friedland, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Alphabet's second quarter 2025 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. Good afternoon, everyone. Q2 was a standout quarter for us, with robust growth across the company. As you saw at I.O., we are leading at the frontier of AI and shipping at an incredible pace. AI is positively impacting every part of the business, driving strong momentum. This quarter, search delivered double-digit revenue growth. Our new search features continue to perform well. AI Mode has launched in the US and India and is going well, while AI Overviews now has over 2 billion monthly users across more than 200 countries and territories and 40 languages. I'll give some more details on search in a moment. We continue to see strong performance in YouTube as well as subscriptions, reflecting great momentum across these high-growth businesses. In the US, Shorts now earn as much revenue per watch hour as traditional in-stream on YouTube. And in some countries, it now even exceeds in-streams rate. Cloud had another great quarter of strong growth in revenues, backlog, and profitability. Its annual revenue run rate is now more than $50 billion. We are seeing significant demand for our comprehensive AI product portfolio. Of course, this is all possible because of the long-term investments we have made in our differentiated, full-stack approach to AI. This spans AI infrastructure, world-class research, models and tooling, and our products and platforms that brings AI to people all over the world. I'll briefly touch on the AI stack before turning to quarterly highlights. First, AI infrastructure. We operate the leading global network of AI-optimized data centers and cloud regions. We also offer the industry's widest range of TPUs and GPUs, along with storage and software built on top. That's why nearly all Gen AI unicorns use Google Cloud. And it's why a growing number, including leading AI research labs like Safe Superintelligence and Physical Intelligence, use TPUs specifically. Our AI infrastructure investments are crucial to meeting the growth and demand from cloud customers. Next, world-class AI research, including models and tooling. We continue to expand our Gemini 2.5 family of hybrid reasoning models, which provide industry-leading performance in nearly every major benchmark. In addition to improving our popular workhorse model, Flash, we debuted an extremely fast Flashlight version. We achieved gold medal-level performance in the International Math Olympiad using an advanced version of Gemini with DeepThink. We can't wait to bring DeepThink to users soon. We have some of the best models available today at every price point. Our 2.5 models have been a catalyst for growth, and 9 million developers have now built with Gemini. I also want to mention VO3, our state-of-the-art video generation model. It's been a viral hit with people sharing clips created in the Gemini app and with our new AI filmmaking tool, Flow. Since May, over 70 million videos have been generated using VO3. And we recently introduced a feature in the Gemini app to turn photos into videos, which people absolutely love. It's also rolling out to Google Photos users starting today. Third are products and platforms. We are bringing AI to all our users and partners through surfaces like Workspace, Chrome, and more. The growth and usage has been incredible. At ION May, we announced that we processed 480 trillion monthly tokens across our surfaces. Since then, we have doubled that number, now processing over 980 trillion monthly tokens, a remarkable increase. The Gemini app now has more than 450 million monthly active users, And we continue to see strong growth and engagement, with daily requests growing over 50% from Q1. In June alone, over 50 million people used AI-powered meeting notes in Google Meet. And powered by VO3, our new short video product and workspace called Google Vets reached nearly 1 million monthly active users. This month at Samsung Galaxy Unpacked, we announced new Android and AI features that are available on Samsung's latest devices. and we are really pleased with the growth in subscriptions, which got a boost from our Google AI Pro and Ultra plans. Now some key highlights from Search, Cloud, YouTube, and Waymo for the quarter. First up, this is an incredibly exciting moment for Search. We see AI powering an expansion in how people are searching for and accessing information, unlocking completely new kinds of questions you can ask Google. Or all queries and commercial queries on search continue to grow year over year. And our new AI experiences significantly contributed to this increase in usage. We are also seeing that our AI features cause users to search more as they learn that search can meet more of their needs. That's especially true for younger users. Let me go deeper on our new search experiences. We know how popular AI overviews are because they are now driving over 10% more queries globally for the types of queries that show them. And this growth continues to increase over time. AI overviews are now powered by Gemini 2.5, delivering the fastest AI responses in the industry. We also saw strong growth in the use of multimodal search, particularly the combination of Lens or Circle to Search together with AI overviews. This growth was most pronounced among younger users. Our new end-to-end AI search experience, AI Mode, continues to receive very positive feedback, particularly for longer and more complex questions. It's still rolling out, but already has over 100 million monthly active users in the US and India. We plan to keep enhancing the AI Mode experience for users by shipping great features fast. That includes our advanced research tool deep search and more personalized responses. Next, Google Cloud. We see strong customer demand driven by our product differentiation and our comprehensive AI product portfolio. Four stats show this. One, the number of deals over $250 million doubling year over year. Two, in the first half of 2025, we signed the same number of deals over $1 billion that we did in all of 2024. Three, the number of new GCP customers increased by nearly 28% quarter over quarter. Four, more than 85,000 enterprises, including LVMH, Salesforce, and Singapore's DBS Bank, now built with Gemini, driving a 35X growth in Gemini usage year over year. Our models are served on our AI infrastructure, which offers industry-leading performance and cost efficiency for both training and inference. Along with our AI accelerators, we introduced new innovations in storage, including Anywhere Cache, which improves inference latency by up to 70%, and Rapid Storage, which delivers a 5x improvement in latency compared to leading hyperscalers. In addition, we have optimized AI software packages, including PyTorch and JAX with full open source supports for various AI training and serving demands. We've also integrated AI agents deeply into each of our cloud products. Wayfair is leveraging our databases integrated with AI to streamline data pipelines and deliver more personalized customer experiences. Mattel is leveraging our Gemini Power data agents and BigQuery to review and act on product feedback more quickly. Target is using our Gemini Power threat intelligence and security operations agents to improve cybersecurity. Capgemini is utilizing our AI software engineering agents to deliver higher quality software faster by automating tasks from code generation to testing. And BBVA says Gemini and Google Workspace is saving employees nearly three hours per week by automating repetitive tasks. It's now rolling it out to 100,000 employees globally. We are also focused on building a flourishing AI agent ecosystem. We introduced an open source agent development kit, which now has over a million downloads in less than four months. We also introduced AgentSpace, an open and interoperable enterprise chat search and agent platform. Gordon Footservice is bringing AgentSpace to its US employees, which is enabling better, more efficient decision making. And over 1 million subscriptions have been booked for AgentSpace ahead of its general availability. Turning now to YouTube. Nielsen data shows YouTube has led US streaming watch time for over two years. A generation that grew up with YouTube on their devices is now increasingly watching their favorite creators and content on their televisions. That includes billions of sports fans too. Globally, they consume more than 40 billion hours of sports content on YouTube annually. And in September, we'll stream the NFL's first Friday game of the season live from Brazil. From sports to shorts, we now average over 200 billion daily views on YouTube Shorts. AI is helping improve our recommendations and auto-dubbing, which translates to better returns for creators and brands by dramatically increasing the potential audiences they can reach. And today, we began rolling out a whole draft of new AI tools for creators on YouTube Shorts. Finally, YouTube continues to diversify its subscription options, recently expanding its premium light offerings to 15 new countries with more to come. And lastly, Waymo continues to scale and expand to safely serve more riders in more places. Last month, Waymo launched in Atlanta, more than doubled its Austin service territory and expanded its Los Angeles and San Francisco Bay Area territories by approximately 50%. Waymo also launched teen accounts, starting with riders age 14 to 17 in Phoenix. Overall, great momentum here. The Waymo driver has now autonomously driven over 100 million miles on public roads. And the team is testing across more than 10 cities this year, including New York and Philadelphia. We hope to serve riders in all 10 in the future. As I said, a standout quarter. A big thank you, as always, to our employees and partners for an amazing Q2. Philip, over to you.