Alphabet 2Q24 Earnings
Happy Thursday.
A few follow-ups to yesterday’s Apple TV+ discussion.
We talked about a scenario involving an Apple user subscribing to Apple TV+ but then not following through in terms of knowing how and where to watch Apple TV+ content. Apple TV+ signups come through various channels including cable bundle deals as well as promotions.
While we can assume Apple has granular information on Apple TV+ consumption, the key piece of information wouldn’t be plain vanilla watchtime data. Instead, broader usage patterns involving Apple TV, the TV app, and finally Apple TV+ would prove more valuable. Interesting observations can be had from seeing how the average Apple user interacts with the three.
A marketing angle that we did not talk about was Apple using different brand marketing tactics to draw more attention to specific Apple TV+ shows and movies. On social media, there always seems to be people claiming to be unaware of certain Apple TV+ shows existing. Netflix has had success leveraging marketing to turn specific shows into something much more than just video content. These are lessons that Apple can learn from (Apple is the true new kid on the block here).
One last point: We shouldn’t understatement how the lack of a back catalog can negatively impact Apple TV+ watchtime. If Apple TV+ is all about great series with shows released weekly, consumption will trend differently versus a steaming service pushing binge watching.
Alphabet 2Q24 Earnings
This past Tuesday, Alphabet reporting earnings. Results for the quarter (April to June) were positive enough to earn an "OK/fine” label relative to recent Alphabet earnings releases. While growth and margin improvement impressed, the rise in capex spending took a bite out of free cash flow.
Revenue growth was 14% (to $85B) with good growth in Search and Cloud. Growth at YouTube slowed as the company began lapping the Temu / Shein etc. ad bonanza from last year. Operating margins moved higher (32% vs. 29% last year) thanks to cost management initiatives. Turning to free cash flow, the $13B total was dinged by a rise in capex and a one-time tax impact.
On Wall Street, reaction to Alphabet (Google) will likely be guided by the battle between two schools of thoughts:
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