Google, Reddit, Snap earnings, and do we need an economic crisis?
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Earnings Roundup: Alphabet, Reddit, and Snap
Alphabet: Q3 revenue of $88.27 billion, earnings per share of $2.12. Analysts expected $86.44 billion worth of revenue, and $1.83 in per-share profit. Shares +6.5% pre-market.
Reddit: Q3 revenue of $348.4 million, earnings per share of $0.16. Analysts had expected revenues of $312.8 million and per-share profit of -$0.07. Shares +20% pre-market.
Snap: Q3 revenue of $1.37 billion, earnings per share of $0.08 per share. Analysts had expected revenues of $1.36 billion, and earnings per share of $0.05 per share. Shares +9% pre-market.
Inside Alphabet’s third quarter
Alphabet’s revenue growth in Q3 2024 (15%) was greater than its growth in Q3 2023 (11%). That’s notable acceleration for a company as old, and large as Alphabet is today. YouTube turned in $1 billion worth of year-over-year revenue growth to $8.9 billion, while Google search added nearly $6 billion in new revenue compared to the year-ago quarter.
But it was Alphabet’s cloud quarter that truly stood out. Not only did Google Cloud put up 35% growth to $11.4 billion in the quarter, and operating profit of $1.95 billion, up massively from $266 million in Q3 of last year.
AI drove cloud growth at Alphabet to a material degree in the the third quarter. Alphabet CEO Sundar Pichai told investors that his company’s “AI portfolio” is “helping [the company] attract new customers, win larger deals, and drive 30% deeper product adoption with existing customers.” Pichai also cited AI-fueled growth in use of its data platform, cybersecurity offerings, and added that its “employee agents” that it offers through “Gemini for Google Workspace are getting superb reviews.”
And then there’s the banger stat that Alphabet tucked into its earnings call:
We're also using AI internally to improve our coding processes, which is boosting productivity and efficiency. Today, more than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers. This helps our engineers do more and move faster.
Recall that Amazon also noted that its internal AI coding tools are saving it thousands of hours on routine maintenance tasks. The question of how will companies use genAI day to day is at least partially answered by the sheer amount of AI-derived code being shipped today.
I don’t think that it is a surprise that as Alphabet crows about boosting its developer productivity, the company is still shrinking. Alphabet ended Q3 2024 with 181,269 employees. A year ago that number was 182,381.
Inside Reddit’s third quarter
Reddit’s quarter was strong in usage, revenue, and revenue mix terms.
Regarding usage, “Daily Active Uniques” at the social media and forum giant grew 47% year-over-year in Q3 2024, to 97.2 million. Reddit also said during its earnings call that it crossed the 100 million DAU number “a few times” during the period. (Earnings call transcript source here.)
Driving usage of Reddit was its massive search weight — the company noted that “Reddit” was the sixth-most Googled word in the quarter, as users append the company’s name to direct the search giant to find them something actually useful — changes to its AMA product and translating its service into more languages.
Revenue growth of 68% in the quarter stomped expectations. Reddit’s COO Jen Wong noted that the figure was predicated on 56% advertising revenue growth, driven by “strong year-over-year growth in impressions from higher user growth, more efficient ad load and expansion of conversation placement ads.”
But what you want to know about is Reddit’s business of selling data to AI companies and other parties. Is that business still doing numbers? Yep. Reddit had $33.2 million worth of data licensing revenues in the third quarter. based on known deals.
But wait, there’s more! Reddit also announced that it closed a data deal with Meltwater. So, expect more data-money goodness from the company.
Inside Snap’s third quarter
Snap grew across several critical lines in the quarter. Including DAUs that scaled 37 million year-over-year to 443 million (+11 million quarter-on-quarter).
More users, more money. Snap’s revenue grew 15% year-over-year, and 11% quarter-on-quarter in Q3 2024. Advertising revenues at Snap rose 10% to $1.25 billion, “driven primarily by growth from [direct response] advertising revenue,” which itself grew 16% year-over-year.
Partially driving growth at Snap is reaching new, smaller advertisers, with the company sharing that its expanded SMB advertiser base helped double “total active advertisers” compared to Q3 2023.
Notably, while North America revenue at Snap grew 9% in the third quarter, it expanded 24% in Europe.
Finally, Snap is getting less unprofitable. In the third quarter, Snap’s net loss was $153 million. That was a sharp improvement over a $368 million net loss recorded in the year-ago period. In adjusted EBITDA terms, Snap put up $132 million, up from $40 million in Q3 2023. And it kicked off $72 million worth of free cash flow, hugely better than the -$61 million it turned in last year.
More users, more revenue, falling losses, and lots of talk about getting to GAAP profitability? You love to see it. Or at least investors do.
More to come as more major companies report.
The beatings will continue until morale improves
The other big story in tech-ish land today is a chat between Elon Musk, and a Twitter account under the name “FischerKing64.” FischerKing64, if you scroll its timeline, is a pretty bog-standard pro-Trump account. Here’s the tweet in question: