Financial Overview: Google (Alphabet Inc.

) vs Amazon
(2022-2023)
Google (Alphabet Inc.) Financial Overview

Q4 2023 Financial Highlights:

 Revenues: $86.31 billion, up 13% year over year.

 Operating income: $23.70 billion, with an operating margin of 27%.

 Net income: $20.69 billion.

 Diluted EPS: $1.64.

Year Ended December 31, 2023:

 Revenues: $307.39 billion, up 9% year over year.

 Operating income: $84.29 billion, with an operating margin of 27%.

 Net income: $73.80 billion.

 Diluted EPS: $5.80.

Google Segment Performance (Q4 2023):

 Google Services:

 Google Search & other: $48.02 billion

 YouTube ads: $9.20 billion

 Google Network: $8.30 billion

 Total Google advertising: $65.52 billion

 Google subscriptions, platforms, and devices: $10.79 billion

 Total Google Services: $76.31 billion

 Google Cloud: $9.19 billion, with operating income of $864 million.

 Other Bets: $657 million.

Q4 2022 vs. Q4 2023 Segment Operating Results:

 Google Services: Operating income increased from $20.22 billion to $26.73 billion.

 Google Cloud: Operating income improved from a loss of $186 million to a gain of $864
million.

 Other Bets: Reduced loss from $1.24 billion to $863 million.

 Alphabet-level activities: Loss increased from $639 million to $3.03 billion.

Key Notes:

 Cost Optimization: Alphabet ended 2023 with strong financial results and is committed to re-
engineering its cost base while investing to support growth opportunities.

 Workforce and Office Space Optimization: Alphabet recorded employee severance and
related charges of $2.1 billion and exit charges of $1.8 billion in 2023 due to a reduction in its
workforce and office space optimization.

 Change in Useful Lives of Equipment: Alphabet adjusted the estimated useful lives of its
servers and network equipment in 2023, resulting in a reduction in depreciation expense of
$983 million and an increase in net income of $765 million.

Amazon's 2022-2023 Financial Performance

Segments and Overview:

 Operations organized into North America, International, and AWS segments.

 Macroeconomic factors like inflation, interest rates, and global economic conditions
impacted operations.

 Expectations of continued impact on operations into Q1 2024.

Net Sales (in millions):

 2022:

 North America: $315,880

 International: $118,007

 AWS: $80,096

 Consolidated: $513,983

 2023:

 North America: $352,828 (12% YoY growth)

 International: $131,200 (11% YoY growth)

 AWS: $90,757 (13% YoY growth)

 Consolidated: $574,785 (12% YoY growth)

Year-over-year Growth (excluding forex):

 North America: 12%

 International: 11%

 AWS: 13%

 Consolidated: 12%
Net Sales Mix:

 North America: 61%

 International: 23%

 AWS: 16%

Operating Income/Loss (in millions):

 2022:

 North America: ($2,847)

 International: ($7,746)

 AWS: $22,841

 Consolidated: $12,248

 2023:

 North America: $14,877

 International: ($2,656)

 AWS: $24,631

 Consolidated: $36,852

Operating Expenses (in millions):

 2022:

 Cost of sales: $288,831

 Fulfillment: $84,299

 Technology and infrastructure: $73,213

 Sales and marketing: $42,238

 General and administrative: $11,891

 Other: $1,263

 Total: $501,735

 2023:

 Cost of sales: $304,739

 Fulfillment: $90,619

 Technology and infrastructure: $85,622

 Sales and marketing: $44,370

 General and administrative: $11,816

 Other: $767
  Total: $537,933

Free Cash Flow (in millions):

 2022:

 Free cash flow: ($11,569)

 Free cash flow less principal repayments: ($19,758)

 Free cash flow less equipment finance leases: ($12,786)

 2023:

 Free cash flow: $36,813

 Free cash flow less principal repayments: $32,158

 Free cash flow less equipment finance leases: $35,549

Effect of Foreign Exchange Rates (in millions):

 2022:

 Net sales: $15,495

 Operating expenses: $16,356

 Operating income: ($861)

 2023:

 Net sales: $71

 Operating expenses: $531

 Operating income: ($460)

Guidance for Q1 2024:

 Net sales: $138.0 billion - $143.5 billion (8% - 13% YoY growth)

 Operating income: $8.0 billion - $12.0 billion (compared to $4.8 billion in Q1 2023)

Comparison Tables

Net Sales Comparison:

Year Google (Alphabet Inc.) Amazon

2022 Not provided $513,983

2023 $307,390 $574,785

Operating Income Comparison:

Year Google (Alphabet Inc.) Amazon

2022 Not provided $12,248

2023 $84,290 $36,852

Cloud Services Comparison (Q4 2023):

Metric AWS (Amazon Web Services) Google Cloud

Revenue $20.3 billion $9.19 billion

Operating Income $6.9 billion $864 million

YoY Revenue Growth 10% 25%

Market Share ~32% ~9%

Conclusion:

Both Google and AWS reported strong growth in their cloud businesses. AWS continues to lead in
terms of revenue and market share. However, Google Cloud is showing promising growth and is a
significant player in the cloud market.

AWS's higher operating margin suggests more efficient operations, possibly due to its longer
presence and deeper integration with enterprise solutions. On the other hand, Google Cloud, with its
AI capabilities and integrations with other Google services, is gaining traction and could potentially
narrow the gap with AWS in the coming years.