Google is one of the best businesses in the history of the world.
Their core Search business is referred to internally as “the cash machine” for good reason. It has helped Google create more profits since its inception than the entire American airline industry has cumulatively produced in 100 years. It also funds all of the other value-creating activities which are starting to bear significant fruit like YouTube, Waymo, Verily, Nest, Google Cloud and more.
Without getting too deep into the weeds, here are 4 charts that should put a smile on every Google shareholder’s face.
Google and Google-owned video site YouTube are by far the two most popular websites on the planet. Together they were visited around 80 billion times in February of this year. That’s a little over 10 visits per living human being in one month. The more frequently people visit Google-owned sites and use Google-owned web browsers and the longer they stay engaged, the more money Google will make off of those customers. For many consumers who use Google’s Chrome web browser, Google isn’t a portal to the internet, it IS the internet.
After a brief slowdown in online ad spending growth following the financial crisis, American internet ad spending has re-accelerated in recent years…with the majority of that growth going to Google and Facebook. We see no reason why this growth won’t continue for the foreseeable future as legacy advertising platforms like linear TV and print media continue to decline. Also note that around 2/3 of digital ad spending is now taking place on mobile devices which is a market Google continues to gain share in.
Android is Google’s smartphone operating system, which was in a competitive fight with Apple, Microsoft, Blackberry and others back in the early days of smartphones in 2010. Today Android dominates the smartphone operating system market. Android has been given away by Google for years to drive traffic to Chrome and Search. In other words, Android itself, which has more than 2 billion active users, has been largely unmonetized up to this point. In the near future, Google will begin monetizing this asset by charging smartphone makers to pre-install Android apps.
Google is also making huge strides in reducing the company’s reliance on advertising revenues. “Other Bets” projects like Waymo, the self-driving technology arm inside of Google, don’t produce huge profits yet but could potentially be worth hundreds of billions of dollars on their own. Google will remain primarily a search and advertising driven company for many years, but the ancillary revenue streams should boost the bottom line and open up future growth avenues in the years ahead.