Brian Savoy: Thanks, Harry, and good morning, everyone. Turning to Slide 7. Our first quarter reported and adjusted earnings per share were $1.44. This compares to reported and adjusted earnings per share of $1.01 and $1.20 last year. Within the segments, Electric Utilities & Infrastructure was up $0.29 compared to last year. Growth was driven by rate increases, higher volumes and improved weather. Partially offsetting these items were higher interest expense and depreciation on a growing asset base. As a reminder, residential decoupling was in effect for both of our North Carolina utilities this quarter, which moderated the impact of a mild winter in the Carolinas. Moving to Gas Utilities & Infrastructure, results were flat compared to last year. And finally, the Other segment was down $0.05, primarily due to higher interest expense. With a strong start to the year, we're on track to deliver on our 2024 EPS guidance range. Turning to Slide 8. We were pleased to see solid growth in weather-normal volumes this quarter versus last year. Customer growth remains robust in our jurisdictions, led by the Carolinas and Florida, which both grew 2.4%. We're also encouraged to see improving residential usage across our jurisdictions. Commercial and industrial volumes were up over 1% versus last year, driven by strength in the commercial sector. We are closely monitoring economic trends and remain in regular conversations with our largest customers. Notably, these customers continue to convey expectations for growing power needs in the second half of the year. Combined with new economic development projects coming online, we expect growth to accelerate throughout the year. Turning to Slide 9. The impact of economic development activity in our jurisdictions cannot be overstated. We are gearing up to serve up to 18,000 gigawatt hours of additional load from these projects in 2028. This is up 2,000 gigawatt hours from the projection we just shared in February, demonstrating the strength of our economic development pipeline. As a reminder, we take a risk-adjusted approach to our forecast and generally only include the most mature and committed projects. We've included a few photos that showcased the impressive size and scale of the construction activity underway. Pictured at the top of the slide is a substation that will serve Wolfspeed's $5 billion semiconductor manufacturing facility in North Carolina. The new factory will bring about 1,800 jobs to the state. We've recently energized the initial transformer bank in the substation, and Wolfspeed expects the facility to begin production by early next year. This project and others across many sectors, including batteries, data centers, EVs and pharmaceuticals to name a few, are making tangible progress and will provide meaningful load growth in our service territories. We operate in some of the most attractive jurisdictions for both economic development and customer migration, which underpins our confidence in our 2% volume growth forecast in 2024 and 1.5% to 2% growth rate over the 5-year planning horizon. Turning to Slide 10. We recognize the importance of a strong balance sheet as we execute one of the sector's largest capital programs. We are on track to achieve 14% FFO to debt by the end of this year, which represents 100 basis points of cushion to our Moody's downgrade threshold. The biggest driver of our FFO improvement is the implementation of the North Carolina rate cases, which add nearly $700 million of annual revenues. Combined with the collection of remaining deferred fuel balances, monetization of tax credits and programmatic equity issuances, we have clear line of sight to achieving our target. As disclosed in February, we expect to issue $500 million of common equity annually over the 5-year plan via our DRIP and ATM programs. We're off to a great start, having priced just over $100 million year-to-date. We also completed approximately 65% of our planned, long-term debt issuances for 2024 in the first quarter, which helps to derisk our plan. We've raised $4.6 billion in long-term debt with an average interest rate of 5.19% and an average tenure of 13 years. We've been strategic in our approach, reducing floating rate exposure amid a rising rate environment and further diversifying our investor base with the euro offering in April. As we have demonstrated this quarter and over many years, we are committed to our credit ratings and a strong balance sheet as we execute our growth objectives. Moving to Slide 11. We remain confident in delivering our 2024 earnings guidance range of $5.85 to $6.10 and growth of 5% to 7% through 2028. We operate in constructive, growing jurisdictions, and the fundamentals of our business are stronger than ever. We are well positioned to achieve our growth targets for the year, which combined with our attractive dividend yields provide a compelling risk-adjusted return for shareholders. With that, we'll open the line for your questions.

Electric Utilities & Infrastructure up last year


electric utilities infrastructure up VAL

Brian Savoy: Thanks, Harry, and good morning, everyone. Turning to Slide 8. We had a strong second quarter with reported and adjusted earnings per share of $1.13 and $1.18, respectively. This is up from adjusted earnings per share of $0.91 in the second quarter last year. Within the segments, Electric Utilities & Infrastructure was up $0.34. Growth was driven by rate increases in riders, higher sales volumes and warmer-than-normal weather across our service territories, which is a complete reversal of the extremely mild weather in the second quarter of 2023. Partially offsetting these items were higher interest expense and depreciation. Moving to Gas Utilities & Infrastructure. Results were down $0.02 compared to last year as favorable rider revenue was offset by higher interest expense and depreciation. And finally, the Other segment was down $0.05, primarily due to higher interest expense. Turning to Slide 9. I'd like to take a moment to discuss our earnings profile for the remainder of the year. As a reminder, last year had an atypical earnings shape with record mild weather in the first half of the year, which was mitigated with agility measures in the second half. With that in mind, the strong performance we've demonstrated so far this year is aligned with our planning assumptions. I'm incredibly proud for the team for delivering an impressive first half, and we are on track to achieve full year results within our guidance range. Turning to Slide 10. We were pleased to see weather normal volumes increased 1.9% versus last year, in line with our full year projection. Customer growth remains robust, led by the Carolinas and Florida, which grew 2.4% through the first half of the year. We're also encouraged to see improving residential usage across our jurisdictions. Commercial and industrial volumes were up over 1% versus last year, driven by strength in the commercial sector. Commercial sales volumes have exceeded our projections through the first half, offsetting a slower rebound in industrial sales. As economic development projects continue to come online throughout the second half of the year, we expect C&I load growth to accelerate. We operate in some of the most attractive jurisdictions for both the economic development and customer migration, which provide conviction in our 2% load growth forecast in 2024, and 1.5% to 2% load growth CAGR over the 5-year planning horizon. Turning to Slide 11. We are forecasting unprecedented growth in power demand from advanced manufacturing projects across multiple sectors as well as data centers. As we evaluate which economic development opportunities to include in our forecast. It's important to remember that we take a risk-adjusted approach. We utilize discrete project level analysis to evaluate and probability weight potential opportunities, resulting in a subset of projects being included in our current projections. We have a robust pipeline of projects that continue to progress and will be reflected in our plans when the projects mature. This pipeline provides a runway for growth well into the future. We are committed to serving this new load in a way that prioritizes reliability and affordability for all our customers. To that end, we recently executed MoUs with Google, Microsoft, Nucor and Amazon to explore tailored solutions to meet large-scale energy needs and develop rate structures to lower the long-term cost of investing in clean energy technologies. These voluntary programs, which are subject to commission approval, would be open to any large customer and would include protections for nonparticipating customers. We look forward to continued collaboration with all stakeholders as we work to meet the accelerating demand in our service territories. Turning to Slide 12. We recognize the importance of a strong balance sheet as we advance our strategic priorities and fund investments that will be foundational to our growth. We are on track to achieve 14% FFO to debt by the end of this year, which represents 100 basis points of cushion to our Moody's downgrade threshold. Our constructive regulatory outcomes, combined with the collection of remaining deferred fuel balances, monetization of tax credits and programmatic equity issuances, provide clear line of sight to achieving our target. As disclosed in February, we expect to issue $500 million of common equity annually over the 5-year plan via our DRIP and ATM programs. We've completed over half of our $500 million target, having priced $285 million year-to-date. We've also completed approximately 80% of our planned long-term debt issuances for 2024. As we've demonstrated over many years, our commitment to our current credit ratings and a strong balance sheet is unwavering and will continue to be a top priority as we execute our growth objectives. Moving to Slide 13. We remain confident in delivering our 2024 earnings guidance range of $5.85 to $6.10 and growth of 5% to 7% through 2028. We operate in constructive growing jurisdictions and the fundamentals of our business are stronger than ever. We are well positioned to achieve our growth targets, which, combined with our attractive dividend yield, provide a compelling risk-adjusted return for shareholders. With that, we'll open the line for your questions.

Electric Utilities & Infrastructure up $0.34


Brian Savoy: Thanks, Harry, and good morning, everyone. As shown on Slide 8, our third quarter reported and adjusted earnings per share were $1.60 and $1.62, respectively. This compares to reported and adjusted earnings per share of $1.59 and $1.94 last year. Within the segments, Electric Utilities and Infrastructure was down $0.09. O&M was higher in the quarter, largely due to unplanned hurricane restoration costs from Debby and Helene. Results were also impacted by lost revenue from storm-related outages and evacuations. As expected, growth from rate increases and riders were partially offset by higher depreciation and interest expense. Moving to Gas Utilities and Infrastructure. Results were down $0.04 compared to last year, mainly due to higher interest expense and depreciation on a growing asset base. And finally, the other segment was down $0.19, primarily due to planned to a planned higher effective tax rate, which reflects tax efficiency efforts realized in 2023. Our 2024 effective tax rate is tracking in line with our full-year guidance of 12% to 14%. Turning to storms, our preliminary total cost estimate for the three hurricanes is between $2.4 billion to $2.9 billion for the year, and we recognized approximately $750 million in the third quarter. Most of these costs will either be deferred for future recovery or relate to capital projects to rebuild portions of the system. We are advancing cost recovery strategies through established mechanisms and have a long track record of constructive outcomes. We're targeting rider recovery in Florida beginning in early 2025 and receipt of securitization proceeds in the Carolinas by the end of next year. Looking ahead to the remainder of 2024, we expect fourth-quarter adjusted EPS to be higher than last year due to growth from rate increases in the electric and gas segments and higher sales volumes. And as Lynn mentioned, we have cost agility initiatives underway to reduce spending, which will drive O&M lower in the fourth quarter compared to last year. We've outlined our fourth-quarter drivers in the appendix of the presentation. With these drivers in mind, we are reaffirming our 2024 guidance range of $585 million to $610 million. Based on what we know today, we are trending to the lower half of the range, primarily due to storm impacts, including restoration costs and lost revenues from record customer outages. Moving to Slide 9. Third quarter weather normal volumes increased 1.1% versus last year, driven by strong commercial volumes and residential customer growth. In the Carolinas, We've added approximately 75,000 residential customers year to date, roughly 10,000 more than the same period last year. And in Florida, We've added nearly 30,000 residential customers, also outpacing last year. We continue to see robust economic development activity and in the past month have signed letter agreements for 2 gigawatts of data centers. These agreements are emblematic of conversations we are having with large customers all around our service territories and represent continued advancement of projects in our pipeline. As a result, we've increased the high end of our 2028 economic development forecast to up to 20,000 gigawatt hours of incremental load. This represents a 2,000 gigawatt hours increase since our second quarter update. As a reminder, we take a risk-adjusted approach as we evaluate which economic development opportunities to include in our forecast. In the near term, we continue to see a slower rebound in certain industrial sectors. We are in frequent dialogue with our largest customers and they continue to signal expectations for a recovery, but the timing has shifted into 2025. Additionally, as with any extreme weather period, third-quarter weather normal volumes likely reflect some impact from the major storms. Overall, we're seeing steady improvement in our rolling 12-month volumes and are trending toward our 2024 load growth target of 2%. And over the long term, we see load growth at the top end of our 1.5% to 2% CAGR through 2028, with annual load growth accelerating in 2027 and 2028 as large economic development projects come online. Turning to Slide 10. We have provided key growth drivers for 2025. We've executed an active regulatory calendar over the past two years that has yielded constructive outcomes and positioned us well as we head into next year. Beginning with the Electric segment, in Florida, we'll implement the new multi-year rate plan with an updated 10.3% ROE in January. In the Carolinas, we'll implement the second year of the North Carolina multi-year rate plans and see a full-year impact from the DEC South Carolina rate case. And in the Midwest, we expect the Indiana rate case to be effective in March. Finally, we'll see retail sales growth from economic development and population migration in addition to increases in rider revenues. In the Gas segment, we'll see growth from the Piedmont North Carolina rate case, integrity management investments and customer additions. We will provide 2025 earnings guidance in February along with updated load growth expectations and our refreshed capital and financing plans. As we signaled, we expect our capital plan to increase as we move further into the energy transition. We also expect capital to increase in the near term as a result of a higher pace of customer additions and refresh cost estimates for generation investments that ramp up in the remainder of the decade. We are well positioned for the opportunities presented by this unprecedented demand growth and we will take a balanced approach to funding the incremental capital, supporting our growth rate and balance sheet strength. Moving to Slide 11. We've made significant progress on credit-supportive initiatives. The constructive regulatory outcomes we've achieved with increasing ROEs and timely recovery of investments have driven considerable improvement in our operating cash flow. And in October, we efficiently monetized nearly $200 million of energy tax credits that will benefit customers over time. We expect additional transactions in the fourth quarter. We've collected over $3 billion of deferred fuel since 2023 and are on track to be at our normal level by year-end. We've also completed over 80% of our planned $500 million equity issuances through the DRIP and ATM programs, having priced $400 million year-to-date. As I mentioned earlier, we will pursue storm cost recovery through established mechanisms in our states, including securitization in the Carolinas and our storm rider in Florida. We expect a temporary credit impact in 2024 and are targeting 14% FFO to debt in 2025, 100 basis points above our Moody's downgrade threshold. In reports issued in October, both Moody's and S&P concurred that the impacts from the storm will not have a long -- any long-term credit implications. As we demonstrated over many years, our commitment to our current credit ratings and our strong balance sheet will continue to be a top priority as we execute our growth objectives. Turning to Slide 12. We operate in constructive growing jurisdictions and the fundamentals of our business remain strong. Our track record of regulatory execution has us well-positioned to achieve our long-term 5% to 7% growth target through 2028, which combined with our attractive dividend yield, provide a compelling risk-adjusted return for shareholders. With that, we will open the line for your questions.

Electric Utilities and Infrastructure third quarter


David Arcaro : Hey, good morning. Thanks for taking my question. Thanks about the FFO to debt range and the target 13% to 14% for this year. I was wondering if you could give a sense of kind of where in that range you're tracking given some of the pressures that you've been experiencing so far? And also just latest thinking on timing for when you can get comfortably above that 14% level?


Carly Davenport: Got it. That's really helpful. And then maybe just a quick follow-up on the balance sheet question. Can you just update us on where you currently stand? And then just relative to the walk that you sort of laid out last quarter, are any of the buckets that bridge the gap of getting to that 14% FFO to debt level changing at all relative to what we saw last quarter?


Brian Savoy: That's very good, Julien. This is Brian. I'll take that. So what we're seeing in the tax credit market, it's deepening. And the discounts that we're being able to realize on our tax credits are very attractive. So think about mid-90s or even slightly above. So I think there's a lot of taxpayers that are looking to reduce their tax bill and they're lining up to get high-quality credits from good credit quality sellers, right? So the -- we did $200 million in the past month and we've geared up our process to close the rest this year and the size that we were targeting coming into the year, Julien, was around $300 million to $500 million. We're trending to the upper part of that range, right? And the market has been growing and deepening, and we've not seen any hesitation by buyers. And what that equates to is about 40 basis points to 60 basis points in the FFO to debt, right? And a big chunk of that is nuclear tax credits and there's also some solar PTCs inside of that figure. And as we look to next year, we'll have more of both, right, more nuclear, more solar. And so you see it being accretive to the FFO for a few years to come.

FFO to debt 40 basis points to 60 basis points


Brian Savoy: It may be the same question. I guess one is in and I wanna part you know, I'm not looking to hold you down. I know you addressed a little bit with Shar. On slide eleven, you talk about FFO to debt to improve above 14% over the five-year plan. What's a reasonable cushion to assume that that like, you would improve by. And the second question is more so as you've talked about in the back end of the plan, you tend you expect to be towards the high end of the 5% to 7% earnings growth. How do you think about the income statement you know, maybe we raise the earnings growth rate or we work on improving the balance sheet maybe to the upgrade trigger. I and it may be the same question, so I'll leave it there.


Lynn Good: So Nick, I would confirm that it does underpin our confidence in 5% to 7% growth. This modernized construct in the Carolinas is consequential. It's kind of a first in the history of the utility that we will have multiyear rate plans, the ability to set price as we go forward, of course, delivering value to customers every step of the way, but also more closely matching the expenditure of capital with return. And I would add to that, our confidence in the capital underpinning that 5% to 7% growth, very transparent, integrated resource plans, the outline what it's going to be necessary to serve this growing state. So the Carolinas are very well positioned for the future. And as Brian mentioned a moment ago, continue to see extraordinary growth in Florida. And we have strong capital in Florida and grid and solar will be updating our multiyear rate plan, and our investment in the Midwest continues well along both generation and grid in Ohio, for example. So, I feel like we've got all of the elements to underpin our confidence in the growth and the jurisdictions are constructive jurisdictions that find the right balance between benefits to customers and investors, and we're confident in the future.


Brian Savoy: Jeremy, it's a good item to talk through. And on the commercial growth, we saw strength across our regions in the commercial sector. Data center growth was a key driver in that in the quarter, and we expect that to continue throughout the year. On the industrial side of things, we have some plants that are retooling for new products. So they're off-line in the first quarter. And they signaled to us that, look, this is a temporary thing, and we're going to be changing our lines and by mid-Q2, late Q2, we're coming back on in full. And we're talking to these customers on a frequent basis to ensure we're there to meet their needs when they need it, and they're tracking on our plan. And we kind of expected this trend to continue because we saw this lag in industrial last year, and we thought by mid-2024, we'd see the tide turn. And then lastly, economic development projects that are coming online in 2024. Those were slated for the second half as well, and those are tracking as planned. So we are on track for our 2% growth in 2024, and we'll keep you apprised as we learn more.


Brian Savoy: Thanks, Harry, and good morning, everyone. As Lynn mentioned, our full-year adjusted earnings per share of $5.90 was within our 2024 guidance range. For the year, we saw top-line growth from rate cases and riders across our jurisdictions, which was partially offset by the impacts of a historic hurricane season. For additional details on 2024 results, please refer to supporting materials in today's news release. Moving to slide eight. We set our 2025 EPS guidance range at $6.17 to $6.42. The $6.30 midpoint represents around 7% growth over 2024. This trend is a continuation of the 6% annual growth we've delivered since 2022. Within the electric segment, constructive rate case outcomes over the past two years will continue to drive results. In January, we implemented our new multi-year rate plan in Florida and entered year two of our multi-year rate plan in North Carolina. See benefits from the DEC South Carolina rate case and our recently approved Indiana rate case, as well as growth from grid riders in the Midwest and Florida. In addition to rate activity, our plan assumes normal weather and retail sales growth of 1.5% to 2% in 2025. Growth in our gas segment will be driven by the Piedmont, North Carolina rate case, and annual rate mechanisms in South Carolina and Tennessee, as well as customer additions and integrity management investments. Finally, we expect results of the other segment to be driven by higher interest expense and modest share dilution to fund our growing capital plan. Turning to slide nine, beginning in 2027, we see an acceleration in volumes, with annual load growth increasing to 3% to 4% at the enterprise. Our confidence in this forecast is underpinned by significant economic development projects coming online, particularly in the Carolinas, which we see growing at 4% to 5% over the same period. Our economic development pipeline reflects advanced manufacturing projects across multiple sectors, as well as data centers. As a reminder, we take a risk-adjusted approach as we evaluate which projects to include in our forecast. We incorporate just a portion of our total pipeline, focusing on those with letter agreements or in very late-stage development. We then utilize discrete project-level analysis to ensure confidence in when the projects will begin commercial operation and require energy supply. In the near term, we're planning for annual load growth between 1.5% to 2% at the enterprise. Our forecast is supported by strong residential customer growth, improving industrial activity, and the expansion of new and existing businesses across our service territories. Moving to slide ten. Our five-year capital plan is now $83 billion, a 12% increase versus our prior plan. The majority of the increase is driven by generation investments reflected in our plan. These investments ramp up over the five-year period as load accelerates and we replace aging infrastructure. In addition, grid investments represent around 45% of our capital plan as we continue to improve the reliability and resiliency of our system. With our updated capital plan, we now expect roughly 7.7% annual earnings base growth through 2029, a 50 basis point increase from our prior plan. Supporting this growth are efficient recovery mechanisms, which are critical to maintaining a healthy balance sheet, mitigating regulatory lag, and smoothing customer rate impacts. The need for infrastructure to support our growing regions is not limited to this five-year plan. We have a long runway of investment opportunities that extend well into the next decade. Turning to slide eleven, as we have demonstrated over many years, our commitment to our current credit ratings and a strong balance sheet will continue to be a top priority. We are targeting 14% FFO to debt by the end of 2025 and expect to improve above 14% over the five-year plan. Our long-term target provides over 100 basis points of cushion above our Moody's downgrade threshold and over 200 basis points above our S&P downgrade threshold. To support these credit objectives and fund accretive growth, we increased equity funding to $6.5 billion over the next five years. This increase in equity funds approximately 40% of our capital plan. We will continue to use our at-the-market and dividend reinvestment programs to efficiently fund our equity needs. As Harry mentioned, we've delivered many constructive regulatory outcomes over the past two years. These results enable timely recovery of investments and drive considerable improvement in our operating cash flow. In addition, we continue to see a strong market for energy tax credits. In 2024, we efficiently monetized over $500 million of credits that will benefit customers over time. Before we open it up for questions, let me close with slide twelve. With a strong track record of regulatory execution, we begin 2025 with confidence in our plan, and our commitment to the dividend remains unchanged. We understand its importance to our shareholders, and this year marks the 99th consecutive year of paying a quarterly cash dividend. As we look ahead, our robust capital plan, strong customer growth, and constructive jurisdictions position us to deliver 5% to 7% growth through 2029 with the potential to earn higher in the range as load growth accelerates in the back end of the plan. Look forward to updating you on our progress throughout the year. That, we'll open the line for your questions.


Ruth Porat: And with respect to CapEx, the CapEx of $11 billion in the fourth quarter, as I indicated, was overwhelmingly investment in our technical infrastructure. To your question, there was no onetime item in there. It really reflects is our outlook for everything Sundar and Philipp and I have been talking about, the extraordinary applications of AI within Google DeepMind, Google Services, Google Cloud, it's across the board for users, for advertisers, developers, cloud enterprise customers, governments. And it's really the long-term opportunity that offers. So last quarter, we did note that CapEx would continue to grow in 2024. We do expect 2024 full year CapEx to be notably larger than 2023. As a note, I think you all know this, but timing of cash payments can affect the quarterly CapEx number. But the main point is we're continuing to invest.


Ruth Porat: And then in terms of CapEx, as I said in opening comments, we do expect the quarterly CapEx throughout the year to be roughly at or above the $12 billion cash CapEx we had here in Q1. As I said, you can always have variability in the reported quarterly CapEx just due to the timing of cash payments, but roughly at or above this level. And it really goes to Sundar's opening comment that we're very committed to making the investments required to keep us at the leading edge in technical infrastructure to support the growth in Cloud, all the innovation in Search that he and Philipp has spoken about and our lead with Gemini. I will note that nearly all of the CapEx was in our technical infrastructure. We expect that our investment in office facilities will be about less than 10% of the total CapEx in 2024, roughly flat with our CapEx in 2023, but is still there. And then with respect to 2025, as you said, it's premature to comment so nothing to add on that.


Ruth Porat : Thank you, Philipp, and thanks, Sundar, for those kind words. We had another strong quarter, driven in particular by performance in Search and Cloud, as well as the ongoing efforts to durably reengineer our cost base. My comments will be on year-over-year comparisons for the second quarter unless I state otherwise. I will start with results at the Alphabet level followed by segment results and conclude with our outlook. For the second quarter, our consolidated revenues were $84.7 billion, up 14% or up 15% in constant currency. Search remained the largest contributor to revenue growth. In terms of expenses, total cost of revenues was $35.5 billion, up 11%. Other cost of revenues was $22.1 billion, up 14%, with the increase driven primarily by content acquisition costs, followed by depreciation as well as the impact of the Canadian digital services tax, which was applied retroactively. Operating expenses were $21.8 billion up 5%, primarily reflecting an increase in R&D partially offset by a decline in G&A with sales and marketing essentially flat to the second quarter last year. The increase in R&D was driven primarily by compensation which was affected by lapping a reduction in valuation-based compensation liabilities in certain other bets in the second quarter last year followed by depreciation. The largest single factor in the year-on-year decline in G&A expenses was lower charges related to legal matters. Operating income was $27.4 billion, up 26% and our operating margin was 32%. Net income was $23.6 billion and EPS was $1.89. We delivered free cash flow of $13.5 billion in the second quarter and $60.8 billion for the trailing 12 months. As a reminder, last year, we had a timing benefit in the second and third quarters from a $10.5 billion deferred cash tax payment made in the fourth quarter, which depressed reported free cash flow growth this quarter, and we'll do so again next quarter. We ended the quarter with $101 billion in cash and marketable securities. Turning to segment results. Within Google Services, revenues were $73.9 billion, up 12%. Google Search and other advertising revenues of $48.5 billion in the quarter were up 14%, led again by growth in retail, followed by the financial services vertical. YouTube advertising revenues of $8.7 billion were up 13% driven by brand followed by direct response advertising. Network advertising revenues of $7.4 billion were down 5%. Subscription platforms and devices revenues were $9.3 billion up 14%, primarily reflecting growth in YouTube subscription revenues. TAC was $13.4 billion, up 7%. Google Services operating income was $29.7 billion up 27% and the operating margin was 40%. Turning to the Google Cloud segment. Revenues were $10.3 billion for the quarter, up 29%, reflecting first significant growth in GCP, which was above growth for cloud overall and includes an increasing contribution from AI. And second, strong Google Workspace growth, primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $1.2 billion and an operating margin of 11%. As to our Other Bets for the second quarter, revenues were $365 million and the operating loss was $1.1 billion. Turning to our outlook for the business. With respect to Google Services, First, within advertising. The strong performance of search was broad-based across verticals. In YouTube, we are pleased with the growth in the quarter. We had healthy watch time growth continued to close the monetization gap in Shorts and had continued momentum in Connected TV, with brand benefiting in part from an ongoing shift in budgets from linear television to digital. As we look forward to the third quarter, we will be lapping the increasing strength in advertising revenues in the second half of 2023, in part from APAC based retailers. Turning to subscriptions, platforms and devices. First, we continue to have significant growth in our subscriptions business which drives the majority of revenue growth in this line. However, there was a sequential decline in the year-on-year growth rate, as we anniversaried the impact of a price increase for YouTubeTV in the second quarter last year. The impact will persist through the balance of the year. Second, with regard to platforms. We are pleased with the performance in play driven by an increase in buyers. Finally, with respect to devices. The most important point as we look forward is that our Made by Google launches have been pulled forward into the third quarter from the fourth quarter last year benefiting revenues in Q3 this year. Turning to cloud, which continued to deliver very strong results. For the first time, Cloud crossed $10 billion in quarterly revenues and $1 billion in quarterly operating profit. As Sundar noted year-to-date, our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than 2 million developers. We're particularly encouraged that the majority of our top 100 customers are already using our generative AI solutions. We continue to invest aggressively in the business. Turning to margins. The margin expansion in Q2 versus last year reflects our ongoing efforts to durably reengineer our cost base, as well as revenue strength. Our leadership team remains focused on our efforts to moderate the pace of expense growth in order to create capacity for the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure. Once again headcount declined quarter-on-quarter, which reflects both actions we have taken in the first half of the year and a much slower pace of hiring. Looking ahead, we expect a slight increase in headcount in the third quarter, as we bring on new graduates. As we have discussed previously, we’re continuing to invest in top engineering and technical talent, particularly in cloud and technical infrastructure. Looking forward, we continue to expect to deliver full-year 2024 Alphabet operating margin expansion relative to 2023. However, in the third quarter operating margins will reflect the impact of both the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure, as well as the increase in cost of revenues due to the pull-forward of hardware launches into Q3. With respect to CapEx, our reported CapEx in the second quarter was $13 billion, once again driven overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers. Looking ahead, we continue to expect quarterly CapEx throughout the year to be roughly at or above the Q1 CapEx of $12 billion keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. With regard to other bets, we continue to focus on improving overall efficiencies, as we invest for long-term returns. Waymo is an important example of this, with its technical leadership coupled with progress on operational performance. As you will see in the 10-Q, we have chosen to commit to a new multi-year investment of $5 billion. This new round of funding, which is consistent with recent annual investment levels will enable Waymo to continue to build the world's leading autonomous driving technology company. To close, this is my 56th and last earnings call, 37 of them at Alphabet. So I have a few closing thoughts of gratitude. I've been so proud to be at Google and Alphabet as CFO and to work with some of the smartest people in the world every day. I think, we have accomplished a lot in the last nine plus years, and I am confident that progress will continue. Of course, I'm not going far and I'm honored to have my new role, which I've been slowly working my way into during the past 11 months and I look forward to continuing to work with Sundar, and our great team. Being CFO of one of the most important companies in the world has been the opportunity and responsibility of a lifetime. Google's Mission of advancing technology and bringing information to people throughout the world is as relevant today as it was when I worked on its IPO. Technology has been a catalyst for economic growth throughout human history. The people on this call know that if a technological advancement is not the focus of every business and government, they will be left behind. Underpinning this is the need for sound and responsible investment. That has never been more important than today and certainly, that is Google and Alphabet's focus. I want to end by thanking Googlers around the world for the innovation and commitment that has enabled us to deliver such extraordinary products and services globally. I also want to thank our investors and analysts for your long-term support and your feedback. Thank you. Sundar, Philipp and I will now take your questions.


Anat Ashkenazi: Yeah, sure. So let me provide a little more color on our capital investments and certainly an important area in the - this time of investments in AI. As you saw in the quarter, we invested $13 billion in CapEx across the company. And as you think about it, really it's divided into two categories. One is our technical infrastructure, and that's the majority of that $13 billion. And the other one goes into areas such as facilities, the Bets and other areas across the company. Within TI, we have investments in servers, which includes both TPUs and GPUs. And then the second categories are data centers and networking equipment. This quarter, approximately 60% of that investment in technical infrastructure went towards servers and about 40% towards data center and networking equipment. And as you think about them, we offer both GPUs and TPUs both internally and to our customers. So we have choices and options based on what our customer needs and what our internal needs are. And as you think about the next quarter and going into next year, as I mentioned in my prepared remarks, we will be investing in Q4 at approximately the same level of what we've invested in Q3, approximately $13 billion. And as we think into 2025, we do see an increase coming in 2025, and we will provide more color on that on the Q4 call, likely not the same percent step-up that we saw between '23 and '24, but additional increase.


Anat Ashkenazi: Thank you, Philipp. We're pleased with the continued momentum we're seeing across the business as Alphabet revenue for 2024 reached $350 billion, up 14% on a reported basis and 15% in constant currency versus 2023. My comments will focus on year-over-year comparisons for the fourth quarter, unless I state otherwise. I will start with the results at the Alphabet level and we'll then cover our segment results. I'll end with some commentary and expectations over the first quarter and full year 2025. We had another strong quarter in Q4 with robust momentum across the business. Consolidated revenue of $96.5 billion, increased by 12% in both reported and constant currency. Search remained the largest contributor to revenue growth, followed by Cloud. Total cost of revenue was $40.6 billion, up 8%. Tech was $14.8 billion, up 6%. We continue to see a revenue mix shift with Google Search growing at double-digit levels, while network revenues, which have a much higher tech rate, declined. Other cost of revenue was $25.8 billion, up 9%, with the increase primarily driven by content acquisitions costs, primarily for YouTube, followed by depreciation, due to increasing investments in our technical infrastructure. Growth in content acquisition and depreciation were partially offset by our year-over-year decline in hardware costs due to the shift in timing of our made-by-Google launches to the third quarter 2024 compared to the fourth quarter of 2023. In terms of total expenses, the year-over-year comparisons reflect $1.2 billion in exit charges that we took in the fourth quarter of 2023 in connection with actions to optimize our global office space. As previously disclosed, those charges were allocated across the expense lines in other costs of revenue and OpEx based on associated headcount. Total operating expenses decreased 1% to $24.9 billion. R&D investments increased by 8%, primarily driven by increase in compensation and depreciation expenses, partially offset by the impact of charges for office [ph] space optimization in the fourth quarter of 2023. Sales and marketing expenses decreased 5%, primarily reflecting the optimization charges last year, as well as declines in compensation and in ads and promotion expenses due to the timing shift of the Pixel launch from Q4 to Q3. G&A expenses declined by 15%, reflecting a shift of timing in our charitable contributions, as well as the optimization charges last year. Operating income increased 31%, the score [ph] to $31 billion, and operating margin increased to 32%, representing 4.6 points of margin expansion. Net income increased 28% to $26.5 billion, and earnings per share increased 31% to $2.15. We delivered free cash flow of $24.8 billion in the fourth quarter and $72.8 billion for the full year 2024. We ended the quarter with $96 billion in cash and marketable securities. Turning to segment results. Google Service revenues increased 10% to $84.1 billion, reflecting the strong momentum across Google Search and YouTube ads. Google Search and other advertising revenues increased by 13% to $54 billion. The robust performance of Search was once again broad-based across verticals, led by the financial service vertical due to strength in insurance, followed by retail. YouTube advertising revenue increased 14% to $10.5 billion, driven by brand, followed by direct response advertising. Network advertising revenue of $8 billion, were down 4%. In the fourth quarter, the year-over-year comparison in all of our advertising revenue lines was impacted by the increase in strength in advertising revenue in Q4 2023, in part from APAC-based retailers. Subscription platforms and device revenues increase 8% to $11.6 billion, primarily reflecting growth in subscription revenues, partially offset by the shift in timing of the launch of our made by Google devices to the third quarter, compared with the fourth quarter in 2023. We continue to have significant growth in our subscription products, primarily due to increase in the number of paid subscribers across YouTube TV, YouTube Music Premium, and Google One. With regards to Platform, we saw a slight increase in the growth rate in Play, primarily due to a strong increase in the number of buyers. Google's service operating income increased 23% to $32.8 billion, and operating margin increased from 35% to 39%, representing a meaningful margin expansion. Turning to the Google Cloud segment, which continued to deliver very strong results this quarter. Revenue increased by 30% to $12 billion in the fourth quarter, reflecting growth in GCP across core GCP products, AI infrastructure, and generative AI solutions. Once again, GCP grew at a rate that was much higher than cloud overall. Healthy Google Workspace growth was primarily driven by increase in average revenue per seat. Google Cloud operating income increased to $2.1 billion, and operating margin increased from 9.4% to 17.5%. We're pleased with the work the cloud team is doing to deliver valuable solutions to the customer and generate revenue growth, as well as its continued focus on driving efficiencies across the cloud business. As for Other Bets, for the fourth quarter, revenue were $400 million, and the operating loss was $1.2 billion. The year-over-year decline in revenue and increase in operating loss primarily reflect the milestone payment in the fourth quarter of 2023 for one of the Other Bets. Turning to Alphabet level activities, the largest component of this line is our investments in AI research and development activities which support all of Alphabet. As a reminder, Alphabet level activities have included nearly all severance charges from reductions in workforce and office space charges. In the fourth quarter of 2024, the biggest factor in year-over-year comparison is the $1.2 billion in charges in the fourth quarter of 2023, almost entirely in connection with office space optimization. With respect to CapEx, our reported CapEx in the fourth quarter was $14 billion, primarily reflecting investments in our technical infrastructure, with the largest component being investment in servers, followed by data centers, to support the growth of our business across Google Services, Google Cloud, and Google DeepMind. In Q4, we returned value to shareholders in the form of $15 billion in share purchases and $2.4 billion in dividend payments. Overall, we returned a total of nearly $70 billion to shareholders in 2024. Turning to 2025, I would like to provide some commentary on several factors that will impact our business performance in both the first quarter and the full year 2025. First in terms of revenue, I'll highlight two items that will have meaningful impact on Q1 revenue across the company. First in terms of revenues, I'll highlight two items that will have meaningful impact on Q1 revenues across the company. The first is the impact of foreign exchange rates. At the current spot rates, we expect a larger headwind to our revenues from the strengthening of the U.S dollar relative to key currencies in Q1 versus Q4 2024. Second is the impact of leap year. We expect a headwind from having one less day of revenue in Q1 2025 compared with leap year in the first quarter of 2024. As for our segments, Google Services, advertising revenue in 2025 will be impacted by lapping the strength we experience in the financial service vertical throughout 2024. And in Cloud, given the revenues are correlated with the timing of deployment of new capacity, we could see variability in cloud revenue growth rates depending on when new capacity comes online during 2025. Moving to investments, starting with our expectation for CapEx for the full year 2025. As we mentioned on the Q3 call, as we expand our AI efforts, we expect to increase our investments in capital expenditure for technical infrastructure, primarily for servers, followed by data centers and networking. We expect to invest approximately $75 billion in CapEx in 2025 with approximately $16 billion to $18 billion of debt in the first quarter. The expected total investment level may fluctuate from quarter-to-quarter, primarily due to timing of deliveries and construction schedules. In terms of expenses, first, the increase in our investment in CapEx over the past few years will increase pressure on the P&L, primarily in the form of higher depreciation. In 2024, we saw 28% year-over-year growth in depreciation as we put more technical infrastructure assets into service. Given the increase in CapEx investments over the past few years, we expect the growth rate and depreciation to accelerate in 2025. Second, we expect some headcount growth in 2025 in key investment areas such as AI and cloud. As you just heard from Sundar, we're delivering products and solutions to customer at a rapid pace, building, testing, and launching products faster than ever before. And as I mentioned on the Q3 call, we're doing that while also focusing on driving further efficiencies in how we operate the business. Before we take questions, I'd like to recap the financial results for the year. For the full year 2024, revenue grew by 14% or by $43 billion, reaching $350 billion. Google Services and Google Cloud each continue to see double-digit revenue growth coupled with margin extension. YouTube and cloud revenues combined, ended the year at $110 billion annual run rate. And in 2024, we generate total income of $112 billion, an increase of 33% from 2023. We're pleased with the momentum we're seeing in AI innovation and monetization. We've been using AI to improve the performance of our ads business for well over a decade, and Cloud is generating billions in annual revenue from AI infrastructure and generative AI solutions. We're also excited about the potential to bring new experiences to users that will provide additional opportunities for monetization. And I look forward to sharing more in our progress throughout the year. Sundar, Philipp, and I will now take your questions.


Anat Ashkenazi: Thanks. And for the question with regards to where do we see or where do I see leverage moving forward and some of the comments I've made on the previous call. I certainly see opportunities for further productivity and efficiency, and this is one of our priority areas. And we're going to do that so that we can make sure we continue to invest in areas such as AI and cloud where we see potential for continued growth. I'll remain focused on areas that I've mentioned before, which include the technical infrastructure, so the $75 billion in CapEx I mentioned for this year, the majority of that is going to go towards our technical infrastructure, which includes servers and data centers. So ensuring we do that in the most efficient way is critical. Second is managing headcount growth, and we're going to be investing in areas of growth, such as AI and cloud, but looking across the organization and moderating that growth will be important. Optimizing the real estate footprint is one of the areas I've mentioned. We're continuing to focus on that. As well as looking at how we simplify the organization, we've previously mentioned bringing like areas together. Sundar talked about bringing some of the AI research teams together so that we can operate with increased speed, but also how we operate within the organization. Using our own AI tools to how we run the business, whether it's the code that Sundar mentioned on the previous call, writing code with AI, or even running some of our key processes using AI tools. So we're looking at all that. It's going to -- it's -- this is not a one-quarter type of effort. It's going to continue throughout the year, and we're going to continue to focus on that so that we can support the growth in other areas.


Ruth Porat: Thank you, Philipp. Our financial results for the first quarter reflect continued healthy fundamental growth in Search and momentum in Cloud. As I go through the discussion today, I will reference some changes to our reporting and disclosures that are covered more fully in the 8-K we filed last week. I will conclude with our outlook. For the first quarter, our consolidated revenues were $69.8 billion, up 3% or up 6% in constant currency. Search remained the largest contributor to revenue growth on a constant currency basis. In terms of expenses and profitability, year-on-year comparisons are impacted by 3 factors: first, the $2.6 billion in charges we took in the first quarter related to workforce and office space reductions. We provided a table in our earnings release that shows the impact of those charges on cost of revenues and operating expenses. Second, the adjustment we made to the estimated useful lives of servers and certain network equipment at the beginning of 2023. As you can see in our earnings release, the effect for the first quarter was a reduction in depreciation expense of $988 million. Third, the shift in timing of our annual employee stock-based compensation awards from January to March delays the step-up in SBC from Q1 to Q2. This shift in timing does not affect the total amount of SBC over the full year 2023. Total cost of revenues was $30.6 billion, up 3%, driven by other cost of revenues of $18.9 billion, which was up 7%, the biggest factor of which was compensation costs associated with data centers and other operations and followed by content acquisition costs. Operating expenses were $21.8 billion, up 19%, with a significant impact from the charges related to workforce and office space reductions. Operating income was $17.4 billion, down 13%, and our operating margin was 25%. Net income was $15.1 billion. We delivered free cash flow of $17.2 billion in the first quarter and $62 billion for the trailing 12 months. We ended the quarter with $115 billion in cash and marketable securities. Turning to our segment results. These were affected by 2 additional changes outlined in our 8-K filing. First, reflecting the increasing collaboration between DeepMind and Google Services, Google Cloud, and Other Bets, as of Q1, DeepMind is reported as part of Alphabet's unallocated corporate costs. And second, beginning in the first quarter, we updated our cost allocation methodologies to provide our business leaders with increased transparency for decision-making. In our filing, we provided a recast of prior period results for the segment for these 2 changes. The highlights of the year-on-year performance of our segments that I will review reflect these recast results. Starting with Google Services. Revenues were $62 billion, up 1%. Google Search and other advertising revenues of $40.4 billion in the quarter were up 2%. YouTube advertising revenues of $6.7 billion were down 3%. Network advertising revenues of $7.5 billion were down 8%. Other revenues were $7.4 billion, up 9%, reflecting primarily ongoing significant subscriber growth in YouTube TV and YouTube Music Premium. TAC was $11.7 billion, down 2%, primarily reflecting a mix shift between Search and Network. Google Services operating income was $21.7 billion, down 1%, and the operating margin was 35%. Turning to the Google Cloud segment. Revenues were $7.5 billion for the quarter, up 28%. Growth in GCP remained strong across geographies, industries and products. Google Workspace's strong results were driven by increases in both seats and average revenue per seat. Google Cloud had operating income of $191 million, and the operating margin was 2.6%. As to our Other Bets, for the first quarter, revenues were $288 million, and the operating loss was $1.2 billion. Turning to our outlook for the business. In terms of the operating environment, our results in the first quarter reflected ongoing headwinds due to a challenging economic environment, and the outlook remains uncertain. Foreign exchange headwinds have moderated, and we expect less of a foreign exchange headwind in the second quarter based on current spot rates. With respect to Google Services, within advertising, Q1 results reflect the resilience of Search with its unique ability to surface demand and deliver measurable ROI. Excluding the impact of foreign exchange, the revenue growth of Search was similar to last quarter. In YouTube, we saw signs of stabilization in ad spend on a sequential basis. We continue to prioritize growth in Shorts engagement where we are encouraged by progress in monetization. As to other revenues, in YouTube subscriptions, we are pleased with the significant ongoing subscriber growth in both YouTube Music Premium and YouTube TV. In Play, revenues were down year-on-year, primarily due to the continued impact of foreign exchange in APAC, although results have improved as we lapped the impact from our introduction of fee reductions last year. Turning to Google Cloud. Our investments in product innovation, our go-to-market organization and our partner ecosystem delivered strong results as customers across industries and geographies increasingly rely on Google Cloud to digitally transform their businesses. That being said, in Q1, we continued to see slower growth of consumption as customers optimized GCP costs, reflecting the macro backdrop which remains uncertain. In terms of operating performance, we remain focused on driving long-term profitable growth in Cloud while continuing to invest given the substantial opportunity. Moving to Other Bets. In the first quarter, we similarly worked to refine strategies and prioritize efforts across the portfolio, including reductions to head count. I will now walk you through an update on our efforts to reengineer our cost base, slowing the pace of operating expense growth while creating capacity for key investment areas, particularly in support of AI across the company. First, as discussed on the fourth quarter call, we have efforts underway in 3 broad categories: number one, using AI and automation to improve productivity across Alphabet for operational tasks as well as the efficiency of our technical infrastructure; number two, managing our spend with suppliers and vendors more effectively; and number three, continuing to optimize how and where we work. As we've noted previously, all 3 work streams are ramping up this year, and we plan to build on these efforts in 2024 and in subsequent years. Second, with respect to head count growth. The reported number of employees at the end of the first quarter includes almost all of the employees impacted by the workforce reduction we announced in January. We expect most of the impacted individuals will no longer be reflected in our head count by the end of the second quarter. In terms of the outlook for head count for the year, as we shared last quarter, we are meaningfully slowing the pace of hiring in 2023 while still investing in priority areas, particularly for top engineering and technical talent. In terms of our investments in AI, we are excited about the creation of Google DeepMind, combining the Brain Team from Google Research with DeepMind, with the goal to accelerate innovation and impact. Beginning in the second quarter of 2023, the costs associated with teams and activities transferred from Google Research will move from Google Services to Google DeepMind within Alphabet's unallocated corporate costs. Finally, as it relates to CapEx, for 2023, we now expect total CapEx to be modestly higher than in 2022. As discussed last quarter, CapEx this year will include a meaningful increase in technical infrastructure versus a decline in office facilities. We expect the pace of investment in both data center construction and servers to step up in the second quarter and continue to increase throughout the year. Thank you. Sundar, Philipp and I will now take your questions.

cash and marketable securities first quarter


Ruth Porat: Thank you, Philipp. Before I go into the results, first, Sundar, thank you very much for the opportunity. I'm very excited about the new role, and I look forward to it. So turning to the results. We're very pleased with our financial results for the second quarter, which reflect an acceleration of growth in Search and momentum in Cloud. My comments will be on year-over-year comparisons for the second quarter unless I state otherwise. I will start with results at the Alphabet level followed by segment results and conclude with our outlook. For the second quarter, our consolidated revenues were $74.6 billion, up 7% or up 9% in constant currency. Search remained the largest contributor to revenue growth. Total cost of revenues was $31.9 billion, up 6%, driven by other cost of revenues of $19.4 billion, which was up 8%. Growth here was driven by content acquisition costs, primarily for YouTube subscription offerings, followed by hardware costs associated with Pixel family launches in the second quarter. As noted in our earnings release, the overall increase in data center and other operations costs was partially offset by a reduction in depreciation expense due to the change in estimated useful lives we discussed last quarter. Operating expenses were $20.9 billion, up 4%. Operating income was $21.8 billion, up 12%, and our operating margin was 29%. I will cover our expense and margin performance in our outlook. Other income and expense was $65 million. Net income was $18.4 billion. We delivered free cash flow of $21.8 billion in the second quarter and $71 billion for the trailing 12 months, reflecting improved operating performance as well as the deferral of certain tax payments to the fourth quarter of 2023 as noted in our earnings release. We ended the quarter with $118 billion in cash and marketable securities. Turning to our segment results. Prior period results have been recast for 2 changes that we made as of the first quarter. First, DeepMind is now reported as part of Alphabet's unallocated corporate costs. Second, we updated our cost allocation methodologies. In the second quarter, we then combined the Brain team from Google Research with DeepMind to form Google DeepMind. Costs associated with the Brain team, which were previously included in Google Services, are now reported as part of Alphabet's unallocated corporate costs. We have not recast prior period results to reflect this additional change. Within Google Services, revenues were $66.3 billion, up 5%. Google Search and other advertising revenues of $42.6 billion in the quarter were up 5%, led by growth in retail. YouTube advertising revenues of $7.7 billion were up 4%, driven by brand advertising, followed by direct response reflecting further stabilization in spending by advertisers. Network advertising revenues of $7.9 billion were down 5%. Other revenues were $8.1 billion, up 24%, reflecting growth in YouTube non-advertising revenues, primarily from subscription growth in YouTube Music Premium and YouTube TV followed by growth in hardware revenues primarily driven by the launch of the Pixel 7a in the second quarter. Finally, Play returned to positive growth in the second quarter. TAC was $12.5 billion, up 3%. Google Services operating income was $23.5 billion, up 8%, and the operating margin was 35%. Turning to the Google Cloud segment. Revenues were $8 billion for the quarter, up 28%. GCP revenue growth remained strong across geographies, industries and products. That being said, we saw a continued moderation in the rate of consumption growth as consumers optimize their spend. Google Workspace strong revenue growth was driven by increases in both seats and average revenue per seat. Google Cloud had operating income of $395 million and the operating margin was 5%. As to our Other Bets, for the second quarter, revenues were $285 million, and the operating loss was $813 million. The decrease in operating loss was primarily driven by a reduction in valuation-based compensation liabilities related to certain Other Bets. Turning to our outlook for the business. With respect to Google Services, first, within advertising. We were pleased with the acceleration of Search advertising revenue growth in the second quarter. Our continued ability to generate sustained growth reflects our unparalleled engineering innovation that creates extraordinary experiences for users and capabilities for advertisers and delivered with the deep expertise of our go-to-market team. And in YouTube, we saw ongoing signs of stabilization in advertiser spending. We are prioritizing product focus on increasing quality consumption of video content with both Shorts and in the living room, which is translating into improved monetization. Second, within other revenues. In our YouTube subscription products, the sustained, strong growth in revenues reflects significant subscriber growth. You may have seen that last week, we increased subscription prices for YouTube Music and Premium, which underscores the value of the products. Strong year-on-year growth in hardware revenues was due, in large part, to a timing change given the Pixel 7a was launched in the second quarter, whereas the Pixel 6a launch occurred in the third quarter last year. Looking ahead, the launch timing change will be a headwind to hardware revenue growth in the third quarter. Play returned to positive growth in the second quarter, driven primarily by a solid increase in the number of buyers. Turning to Google Cloud. We are particularly excited about the customer interest in our AI-optimized infrastructure, our large language models, our AI platform services and our new generative AI offerings such as Duet AI for Google Workspace, although we are still clearly in the early days. At the same time, we continue to experience headwinds in the second quarter for moderation in consumption growth as customers optimize their spend. We continue to invest aggressively while remaining focused on profitable growth. In terms of expenses and profitability, we remain very focused on durably reengineering our cost base. Most evident to date are the actions we have taken to reduce the pace of headcount growth, including the workforce reductions we announced in the first quarter and a slower pace of organic hiring, in part given our focus on reallocating talent from within to fuel our growth priorities. A quick comment on the sequential improvement in operating margins in the second quarter. There are 2 factors to note. First, the benefit from an acceleration in search advertising revenue growth in the second quarter. Second, the vast majority of the charges related to our workforce reduction and optimization of our global office space were taken in Q1. Finally, as it relates to CapEx, in Q2, the largest component was for servers, which included a meaningful increase in our investments in AI compute. The sequential step-up in the second quarter was lower than anticipated for 2 reasons. First, with respect to office facilities, we continue to moderate the pace of fit-outs and ground-up construction to reflect the slower expected pace of headcount growth. Second, there were delays in certain data center construction projects. We expect elevated levels of investment in our technical infrastructure increasing through the back half of 2023 and continuing to grow in 2024. The primary driver is to support the opportunities we see in AI across Alphabet, including investments in GPUs and proprietary TPUs as well as data center capacity. With all that said, we remain committed to durably reengineering our cost base in order to help create capacity for these investments in support of long-term, sustainable financial value. Thank you. Sundar, Philipp and I will now take your questions.

cash and marketable securities second quarter


Ruth Porat: Thank you, Philipp. We are very pleased with our financial results for the third quarter, driven by meaningful growth in Search and YouTube and momentum in Cloud. My comments will be on year-over-year comparisons for the third quarter, unless I state otherwise. I will start with results at the Alphabet level followed by segment results and conclude with our outlook. For the third quarter, our consolidated revenues were $76.7 billion, up 11% in both reported and constant currency. Search remained the largest contributor to revenue growth. In terms of expenses, total cost of revenues was $33.2 billion, up 7%, primarily reflecting other cost of revenues of $20.6 billion, which was up 6%. Growth here was primarily driven by content acquisition costs mainly for YouTube subscription offerings. As noted in our earnings release, the overall increase in data center and other operations costs was partially offset by a reduction in depreciation expense due to the change in estimated useful lives we made starting in the first quarter of the year. Operating expenses were $22.1 billion, up 6% reflecting the following. First, an increase in R&D expenses, driven primarily by compensation. Second, an increase in G&A expenses, reflecting the impact of charges related to legal matters. And finally, sales and marketing expenses, which were relatively flat to last year. Operating income was $21.3 billion, up 25%, and our operating margin was 28%. Other income and expense was a loss of $146 million. Net income was $19.7 billion. This reflects an effective tax rate of 7% in the third quarter from an IRS change related to the use of foreign tax credits, which had an outsized impact on the third quarter rate because the change resulted in a catch-up for prior periods. We delivered free cash flow of $22.6 billion in the third quarter and $78 million for the trailing 12 months. We ended the quarter with $120 billion in cash and marketable securities. As a reminder, our cash balance and free cash flow in the second and third quarters benefited from the deferral of certain tax payments to the fourth quarter of 2023. As noted in our earnings release, on October 16, we made an estimated tax payment of $10.5 billion related to this deferral, which will be reflected in our cash balance and free cash flow in the fourth quarter. Turning to segment results. Within Google Services, revenues were $68 billion, up 11%. Google Search and other advertising revenues of $44 billion in the quarter were up 11%, led again by growth in retail. YouTube advertising revenues of $8 billion were up 12%, driven by both brand advertising and direct response. Network advertising revenues of $7.7 billion were down 3%. Other revenues were $8.3 billion, up 21%, primarily reflecting growth in YouTube non-advertising revenues driven by subscriber growth in YouTube TV followed by YouTube Music Premium. TAC was $12.6 billion, up 7%. Google Services operating income was $23.9 billion, up 27% and the operating margin was 35%. Turning to the Google Cloud segment. Revenues were $8.4 billion for the quarter, up 22%. GCP revenue growth remained strong across geographies, industries and products, although the Q3 year-on-year growth rate reflects the impact of customer optimization efforts. Google Workspace also delivered strong revenue growth, primarily driven by increases in average revenue per seat. Google Cloud had operating income of $266 million, and the operating margin was 3%. As to our Other Bets, for the third quarter, revenues were $297 million and the operating loss was $1.2 billion. Turning to our outlook for the business. With respect to Google Services. First, within advertising. After a period of historic volatility, we were pleased with the year-on-year revenue growth of Search and YouTube advertising in the third quarter. Second, within other revenues, in our YouTube subscription products the substantial growth in revenues primarily reflects subscriber growth. Looking ahead, a full quarter of NFL Sunday Ticket revenues as well as associated content acquisition costs will be reflected in Q4 results compared to only a few weeks in the third quarter. Play had growth in the third quarter, driven primarily by an increase in the number of buyers. With respect to hardware, there is a headwind to revenues in the fourth quarter, reflecting efforts to optimize the portfolio with tighter targeting of our go-to-market investments as well as the ongoing impact from the difference in launch timing for the Pixel 6a and 7a that we mentioned last quarter. Turning to Google Cloud. We are pleased with the ongoing customer engagement with GCP and Workspace and the potential benefit of our AI solutions including infrastructure and services such as Vertex AI and Duet. We continue to invest aggressively given the significant potential we see while remaining focused on profitable growth. In terms of expenses and profitability, we're pleased with our operating performance. As we have repeatedly stressed, we remain focused on durably reengineering our cost base to create investment capacity to support our growth priorities, most important of which is with AI. We have a number of workstreams in place. First, we are maintaining a slower pace of headcount growth, reflecting product prioritization and reallocation of talent to support our most important growth opportunities. Second, we remain focused on optimizing our real estate footprint, including how and where we work to reduce our expense growth. As you can see from our earnings release, we incurred $207 million in accelerated rent and depreciation in the third quarter related to these actions. Third, we have engineering work streams underway to improve productivity across Alphabet. Given the magnitude of investment in our technical infrastructure, we have a superb team focused on efficiency of our operations there. We are also making progress in streamlining operations across Alphabet through the use of AI. Finally, there are ongoing workstreams that are improving the efficiency of our spend with suppliers and vendors through our central procurement organization. And to be clear, across the portfolio of other bet companies, we have also been working to identify opportunities to create sharper focus and to operate more efficiently and effectively. With respect to sequential quarter-on-quarter trends, two further points. First, cost of sales in the fourth quarter will reflect both higher hardware costs given Pixel family launches as well as increased CAC for YouTube as previously noted. Second, as usual, we expect sales and marketing expenses to be more heavily weighted to the end of the year, in part to support product launches in the holiday season. Finally, our reported CapEx in Q3 was $8 billion, driven overwhelmingly by investment in our technical infrastructure with the largest component for servers, followed by data centers, reflecting a meaningful increase in our investments in AI compute. The growth in reported cash CapEx in Q3 is somewhat muted due to the timing of supplier payments, which can cause variability from quarter-to-quarter. We continue to invest meaningfully in the technical infrastructure needed to support the opportunities we see in AI across Alphabet and expect elevated levels of investment, increasing in the fourth quarter of 2023 and continuing to grow in 2024. In closing, we remain very excited about the opportunities ahead and committed to deliver sustainable financial value. Thank you. Sundar, Philipp and I will now take your questions.

cash and marketable securities third quarter


Ruth Porat: Thank you, Philipp. We are very pleased with our full year results with 2023 Alphabet revenues of $307 billion, up 9% versus 2022, which added $25 billion to revenues for the year. We ended with a strong fourth quarter with consolidated revenues of $86.3 billion, up 13% versus last year in both reported and constant currency. Search remained the largest contributor to revenue growth. My comments will be on year-over-year comparisons for the fourth quarter, unless I state otherwise. Total cost of revenues was $37.6 billion, up 6%. Other cost of revenues was $23.6 billion, up 5%, with the increase driven primarily by content acquisition costs associated with YouTube subscription offerings. The growth rate also reflects the offsetting benefit of lapping $1.2 billion in inventory-related charges that we called out in the fourth quarter last year as well as a reduction in depreciation expense due to changes in estimated useful lives we made starting in the first quarter of 2023. In terms of total expenses, the year-on-year comparisons reflect an additional $1.2 billion in exit charges that we took in the fourth quarter of 2023 in connection with actions to optimize our global office space. As you can see in our earnings release, these charges were allocated across the expense lines in other cost of revenues and OpEx based on associated head count. Operating expenses were $25 billion, up 11%, primarily reflecting an increase in R&D expenses, which were driven by the real estate charges, followed by compensation. Operating income was $23.7 billion, up 30%, and our operating margin was 27%. Net income was $20.7 billion, and EPS was $1.64. We delivered free cash flow of $7.9 billion, which was affected by the timing of the $10.5 billion tax payment we made on October 16 that we called out previously related to the deferral of certain tax payments to the fourth quarter. For the full year 2023, free cash flow was $69 billion. We repurchased a total of $62 billion of our Class A and Class C shares in 2023 and ended the year with $111 billion in cash and marketable securities. Turning to segment results. Within Google Services, revenues were $76.3 billion, up 12%. Google Search and other advertising revenues of $48 billion in the quarter were up 13%, led again by growth in retail. YouTube advertising revenues of $9.2 billion were up 16% driven by both direct response and brand advertising. Network advertising revenues of $8.3 billion were down 2%. Subscriptions, platforms and devices revenues, which we previously referred to as other revenues, were $10.8 billion, up 23%, primarily reflecting growth in YouTube subscription revenues. TAC was $14 billion, up 8%. Google Services' operating income was $26.7 billion, up 32%, and the operating margin was 35%. Turning to the Google Cloud segment. Revenues were $9.2 billion for the quarter, up 26%. We're very pleased with the momentum of GCP with an increasing contribution from AI. Google Workspace also delivered strong revenue growth primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $864 million and an operating margin of 9%. As to our Other Bets, for the full year 2023, revenues were $1.5 billion and the operating loss was $4.1 billion. Results in the fourth quarter benefited from a milestone payment in one of the Other Bets. Turning to our outlook for the business. With respect to Google Services, first, within advertising. We were pleased with the sequential revenue growth of Search and YouTube advertising throughout 2023, which reflects the extraordinary work across our teams to drive improved experiences for users and attractive ROI for advertisers. As we enter 2024 with advertising revenues of more than $100 billion higher than 2019, we remain focused on sustaining healthy growth on this larger base. Second, within subscriptions, platforms and devices, our total revenues from subscription products reached $15 billion for the full year 2023 driven primarily by substantial growth in subscribers for our YouTube subscription offerings. The substantial increase in our subscription revenues over the past few years demonstrates the ability of our teams to deliver high value-add offerings and provides a strong base on which to build, including through YouTube and newer services like Google One. Play had solid growth again in the fourth quarter driven primarily by an increase in the number of buyers. In devices, we continue to make sizable investments with increased emphasis on our Pixel family, particularly with AI-powered innovation while driving further efficiencies across the portfolio. Turning to Google Cloud. We are pleased with operating performance in the year. Full year revenues of $33 billion were up 26% versus prior year, ending with strong Q4 performance. The Cloud team is intensely focused on bringing the benefits of Gemini, our industry-leading AI technology, to enterprises and governments globally, and we are gratified with the level of engagement. The strong demand we are seeing for our vertically integrated AI portfolio is creating new opportunities for Google Cloud across every product area. In terms of profitability, the improvement in 2023 reflects sustained focus across the team with the intent to maintain healthy profitability while we continue to invest to support long-term growth. Turning to margins and expenses. As we have repeatedly stressed, we remain committed to our framework to durably reengineer our cost base as we invest to support our growth priorities. Key contributors to moderating our expense growth include: first, product and process prioritization to ensure we have the right resources behind our most important opportunities and to reallocate resources where we can; second, organizational efficiency and structure. We're focused on removing layers to simplify execution and drive velocity. Both product prioritization and the organization design efforts result in a slower pace of hiring, as you can see with our head count down year-on-year, reflecting the reductions we announced in the first quarter of 2023 and a much slower pace of hiring. We will continue to invest in top technical and engineering talent. Finally, we continue to execute the other work streams to slow expense growth, including improving efficiency in our technical infrastructure, streamlining operations across Alphabet through the use of AI, increasing efficiency of our spend with suppliers and vendors through our central procurement organization and optimizing our real estate portfolio. With respect to CapEx, our reported CapEx in the fourth quarter was $11 billion, driven overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers. The step-up in CapEx in Q4 reflects our outlook for the extraordinary applications of AI to deliver for users, advertisers, developers, cloud enterprise customers and governments globally and the long-term growth opportunities that offers. In 2024, we expect investment in CapEx will be notably larger than in 2023. With regard to Other Bets, we've been working to sharpen our investment focus while capturing the upside given compelling technology breakthroughs across the portfolio. For example, last week, Alphabet's X announced that it would be moving to spin out more projects as independent companies through external capital, giving X the opportunity to bring more focus to the breakthrough technologies it is working on to address some of the world's most pressing challenges. Thank you. Sundar, Philipp and I will now take your questions.


Ruth Porat: Thank you, Philipp. We are very pleased with our financial results for the first quarter driven, in particular, by strength in Search and Cloud as well as the ongoing efforts to durably reengineer our cost base. My comments will be on year-over-year comparisons for the first quarter unless I state otherwise. I will start with results at the Alphabet level, followed by segment results and conclude with our outlook. For the first quarter, our consolidated revenues were $80.5 billion, up 15% or up 16% in constant currency. Search remained the largest contributor to revenue growth. In terms of total expenses, the year-on-year comparisons reflect the impact of the restructuring charges we took in the first quarter of 2023 of $2.6 billion as well as the $716 million in employee severance and related charges in the first quarter of 2024. As you can see in our earnings release, these charges were allocated across the expense lines in other cost of revenues and OpEx based on associated head count. To help with year-on-year comparisons, we included a table in our earnings release to adjust other cost of revenues, operating expenses, operating income, and operating margin to exclude the impact of severance and related office space charges in the first quarter of 2023 versus 2024. In terms of expenses, total cost of revenues was $33.7 billion, up 10%. Other cost of revenues was $20.8 billion, up 10% on a reported basis, with the increase driven primarily by content acquisition costs associated with YouTube given the very strong revenue growth in both subscription offerings and ad-supported content. On an adjusted basis, other cost of revenues were up 13% year-on-year. Operating expenses were $21.4 billion, down 2% on a reported basis, primarily reflecting expense decreases in sales and marketing and G&A, offset by an increase in R&D. The largest single factor in the year-on-year decline in G&A expenses was lower charges related to legal matters. On an adjusted basis, operating expenses were up 5%, reflecting, first, in R&D, an increase in compensation expense, primarily for Google DeepMind and Cloud; and second, in sales and marketing, a slight increase year-on-year, reflecting increases in compensation expense primarily for Cloud sales. Operating income was $25.5 billion, up 46% on a reported basis, and our operating margin was 32%. On an adjusted basis, operating income was up 31%, and our operating margin was 33%. Net income was $23.7 billion and EPS was $1.89. We delivered free cash flow of $16.8 billion in the first quarter and $69.1 billion for the trailing 12 months. We ended the quarter with $108 billion in cash and marketable securities. Turning to segment results. Within Google Services, revenues were $70.4 billion, up 14%. Google Search and other advertising revenues of $46.2 billion in the quarter were up 14% led again by growth in retail. YouTube advertising revenues of $8.1 billion were up 21% driven by both direct response and brand advertising. Network advertising revenues of $7.4 billion were down 1%. Subscriptions, platforms and devices revenues were $8.7 billion, up 18%, primarily reflecting growth in YouTube subscription revenues. TAC was $12.9 billion, up 10%. Google Services operating income was $27.9 billion, up 28%. And the operating margin was 40%. Turning to the Google Cloud segment. Revenues were $9.6 billion for the quarter, up 28%, reflecting significant growth in GCP with an increasing contribution from AI and strong Google Workspace growth, primarily driven by increases in average revenue per seat. Google Cloud delivered operating income of $900 million and an operating margin of 9%. As to our Other Bets, for the first quarter, revenues were $495 million, benefiting from a milestone payment in one of the Other Bets. The operating loss was $1 billion. Turning to our outlook for the business. With respect to Google Services, first, within Advertising, we are very pleased with the momentum of our Ads businesses. Search had broad-based strength across verticals. In YouTube, we had acceleration in revenue growth driven by brand and direct response. Looking ahead, two points to call out: first, results in our advertising business in Q1 continued to reflect strength in spend from APAC-based retailers, a trend that began in the second quarter of 2023 and continued through Q1, which means we will begin lapping that impact in the second quarter; second, the YouTube acceleration in revenue growth in Q1 reflects, in part, lapping the negative year-on-year growth we experienced in the first quarter of 2023. Turning to subscriptions, platforms, and devices. We continue to deliver significant growth in our subscriptions business, which drives the majority of revenue growth in this line. The sequential quarterly decline in year-on-year revenue growth for the line in Q1 versus Q4 reflects, in part, the fact that we had only 1 week of Sunday Ticket subscription revenue in Q1 versus 14 weeks in Q4. Looking forward, we will anniversary last year's price increase in YouTube TV starting in May. With regard to platforms, we are pleased with the performance in Play driven by an increase in buyers. With respect to Google Cloud, performance in Q1 reflects strong demand for our GCP infrastructure and solutions as well as the contribution from our Workspace productivity tools. The growth we are seeing across Cloud is underpinned by the benefit AI provides for our customers. We continue to invest aggressively while remaining focused on profitable growth. As we look ahead, two points that will affect sequential year-on-year revenue growth comparisons across Alphabet: first, Q1 results reflect the benefit of leap year, which contributed slightly more than 1 point to our revenue growth rate at the consolidated level in the first quarter; second, at current spot rates, we expect a larger headwind from foreign exchange in Q2 versus Q1. Turning to margins. Our efforts to durably reengineer our cost base are reflected in a 400 basis point expansion of our Alphabet operating margin year-on-year, excluding the impact of restructuring and severance charges in both periods. You can also see the impact in the quarter-on-quarter decline in head count in Q1, which reflects both actions we have taken over the past few months and a much slower pace of hiring. As we have discussed previously, we are continuing to invest in top engineering and technical talent, particularly in Cloud, Google DeepMind and technical infrastructure. Looking ahead, we remain focused on our efforts to moderate the pace of expense growth in order to create capacity for the increases in depreciation and expenses associated with the higher levels of investment in our technical infrastructure. We believe these efforts will enable us to deliver full year 2024 Alphabet operating margin expansion relative to 2023. With respect to CapEx, our reported CapEx in the first quarter was $12 billion, once again driven overwhelmingly by investment in our technical infrastructure, with the largest component for servers followed by data centers. The significant year-on-year growth in CapEx in recent quarters reflects our confidence in the opportunities offered by AI across our business. Looking ahead, we expect quarterly CapEx throughout the year to be roughly at or above the Q1 level, keeping in mind that the timing of cash payments can cause variability in quarterly reported CapEx. With regard to Other Bets, we similarly have work streams underway to enhance overall returns. Finally, as I trust you saw in the press release, we are very pleased to be adding a quarterly dividend of $0.20 per share to our capital return program as well as a new $70 billion authorization in share repurchases. The core of our capital allocation framework remains the same, beginning with investing aggressively in our business as you have heard us talk about today. Given the extraordinary opportunities ahead, we view the introduction of the dividend as further strengthening our overall capital return program. Thank you. Sundar, Philipp, and I will now take your questions.

Alphabet cash and marketable securities first quarter


cash and marketable securities second quarter