Alphabet reports Q3 revenue up 15% YoY to $88.27B, Search revenue up 12% YoY, net income up 34% YoY, and traffic acquisition costs up 9% YoY; GOOG jumps 5%+

MOUNTAIN VIEW, Calif. - October 29, 2024 - Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2024.

Alphabet 2024-10-30

Context & Ripple Effects

Alphabet's Q3 follows a Q2 report showing 14% revenue growth and higher Search sales, extending a 2024 run of double-digit top-line expansion. The new quarter also improves on the prior-year Q3, when revenue grew 11% and the market focused on a cloud-sales shortfall.

The combination of 12% Search growth and a 9% rise in traffic-acquisition costs matters because it shows Alphabet is growing its core advertising engine while continuing to pay distribution partners to secure user traffic.

First-order effects

Alphabet's reported revenue and net-income gains, alongside 12% Search growth, immediately reinforce the scale and earnings contribution of its core advertising business; GOOG rose more than 5% after the release.
Higher traffic-acquisition costs mean Alphabet is paying more to the partners that direct search traffic to Google, even as Search revenue grew faster than those costs.

Second-order effects

Distribution partners that receive traffic-acquisition payments gain from a larger Alphabet payout pool and may have a stronger basis to defend their economics in renewal discussions if search growth persists.
Rival ad platforms face a tougher competitive backdrop: Alphabet's continued Search growth gives it more capacity to protect advertiser demand and fund distribution, though this report alone does not show changes in ad pricing or market share.

Third-order effects

If Search revenue repeatedly outpaces traffic-acquisition-cost growth, Alphabet's distribution-heavy search model can remain economically resilient even as partner payments rise.
The longer-term constraint is bargaining power around default distribution: sustained TAC growth would keep partner economics central to the structure of search competition, rather than making traffic ownership irrelevant.

The trend: This is another data point in the persistence of scaled search advertising as a cash-generating platform whose growth is shared, in part, with the distribution partners that supply user traffic.

Discussion

@daveleebbg Dave Lee on threads
Google chief business officer Philipp Schindler saying users appreciate the addition of advertising within AI Overviews because it means “they can quickly connect with relevant businesses” I'm always hearing people say that
@waymo @waymo on x
Waymo One is now providing over 150,000 paid trips and driving over 1 million fully autonomous miles every week. The future is here, it's growing, and it's taking riders safely to their destinations every day. [video]
@sundarpichai Sundar Pichai on x
6/ Last but not least: @Waymo's doing really well - 1M fully autonomous miles and 150K paid rides / week, plus partnerships with Uber + Hyundai, 6th-gen Waymo Driver, growing commercial opportunity. Here's a photo after a recent concert in SF - Waymo after Waymo picking people […
@divestech Dan Ives on x
Alphabet robust numbers and outlook. Cloud strength and AI driven enterprise deals a highlight. Advertising rebound continues. Bullish for Big Tech as Capex robust into 2025. Big week ahead 🔥🏆🍿🐂
@sundarpichai Sundar Pichai on x
2/ Gemini API calls, token volume, consumer usage, business adoption - all growing dramatically. And all 7 of our products and platforms with 2B+ monthly users use Gemini models, including the newest 2B-user product, Google Maps. [image]
@sundarpichai Sundar Pichai on x
@YouTube 5/ We continue to invest in state-of-the-art infrastructure to support our AI efforts, including important work inside our data centers to drive efficiencies, while making significant hardware and model improvements. [image]
@munster_gene Gene Munster on x
Question came up if $AAPL's Safari default search deal gets voided by DOJ. Sundar basically said they're the leader and people will ultimately seek out $GOG. My take - the best thing for Google is to step away from Apple and save around $15B a year, take the near term hit on se…
@munster_gene Gene Munster on x
Hearing noticeably more about Waymo on this call vs the previous 10 earnings call. It's still too small and will likely be too small in the next five years for most Google investors to care. Could add 5-10% to the companies overall value.
@danielbzhao Daniel Zhao on x
Alphabet's employee count has been essentially unchanged since Q2 2023 $GOOG [image]
@patrickmoorhead Patrick Moorhead on x
Every company should outline earnings on X like Sundar does. Simple, straightforward, and makes you want to click to see the details. Bravo Google. Amazing so many tech companies live in the dark ages of IR.
@patrickmoorhead Patrick Moorhead on x
$GOOGL beats Q3 on nearly every expectation metric across every business line. Google Cloud beats big on revenue and profit. Nearing $50B annual revenue run rate. More on the pod Friday.
@sundarpichai Sundar Pichai on x
3/ Recent AI advancements, including AI Overviews, Circle to Search, and new Lens features, are expanding what people can search for and how they search for it. This leads to people coming to Search more often, driving additional search queries. [image]
@munster_gene Gene Munster on x
Waymo is dong 150k rides a week. This is up from the “more than 100k” rides per week that the Waymo CEO (Tekedra Mawakana) reported to the WSJ last week.
@munster_gene Gene Munster on x
Philipp Schindler, Chief Business Officer, says people seeing adds directly in the generative results and added that AI “supercharges” search. I think the “supercharge” comment is related to the user experience today and lays the ground work that AI will be positive for Google
@munster_gene Gene Munster on x
** Key Comment from Call ** Sundar say users are using Google more because of AI Overviews. He added this increases Search revenue. AI Overviews will expanded to over a billion people in October. In the June quarter I estimate it was available to US only, or about 275m people.…
@munster_gene Gene Munster on x
Google Cloud: Growth accelerated to 35% y/y vs. 29% in June-24. Why this is important: This is a positive read on the broader AI trade given this is evidence that hyperscalers cloud businesses are growing faster than expected and that growth is driven by compute for AI.
@sundarpichai Sundar Pichai on x
** Key Comment from Call ** Sundar say users are using Google more because of AI Overviews. He added this increases Search revenue. AI Overviews will expanded to over a billion people in October. In the June quarter I estimate it was available to US only, or about 275m people.…

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