Good morning.
Google needs a CFO.
Ruth Porat, SVP and CFO at Google and parent company Alphabet, was promoted to the newly created role of president and chief investment officer, effective Sept. 1. Porat will continue as CFO of Alphabet and Google until a successor is appointed, the company said Tuesday in its earnings release.
Porat is the tech giant’s longest-serving CFO, beginning in 2015. Last year, she oversaw Google’s acquisition of cybersecurity company Mandiant for $5.4 billion, a deal completed in September. It was the company’s second-largest acquisition ever.
Porat will continue to report to CEO Sundar Pichai but will focus on the company’s global investments and on engagement with policymakers and regulators. She will oversee the company’s “Other Bets” portfolio, which includes Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X.
Porat said on the earnings call she was “excited” about the new role, adding: "To be able to focus on the impact of economic growth and the opportunity for people, for organizations, for countries, I think is a privilege."
As for Q2 earnings, Alphabet came in with $74.6 billion in revenue, compared with $69.6 billion a year ago. Revenue beat expectations of $72.75 billion, and ad revenue reached $58.14 billion, up from $56.2 billion at the same time last year. Net income was $18.4 billion, up from $16 billion. Due to the mass layoffs announced in January, it incurred employee severance and related charges of $2 billion for the six months ending June 30.
Porat said the quarterly results showed a “continued resilience in Search, with an acceleration of growth in both Search and YouTube, as well as momentum in Cloud.” The company is continuing to invest for growth, she said.
A focus on A.I. was continually referenced during the earnings call. "This is our seventh year as an A.I.-first company, and we intuitively know how to incorporate A.I. into our products," Pichai said. The company is “driving the next evolution of Search,” he noted in the announcement.
My colleague Jeremy Kahn's new feature, "Inside Google’s scramble to reinvent its $160 billion search business—and survive the A.I. revolution," takes a deep dive into the company’s pursuits.
“Now A.I. is having a major moment—but a Google rival is grabbing all the attention,” Kahn writes. “The November debut of ChatGPT caught Google off guard, setting off a frantic six months in which it scrambled to match the generative A.I. offerings being rolled out by ChatGPT creator OpenAI and its partner and backer, Microsoft.”
In March, Google launched Bard as an answer to ChatGPT and Microsoft's Bing Chat. Since then, Google has been making updates to the product. But Search remains Google’s bread and butter, driving more than $160 billion in revenue last year—about 60% of Alphabet’s total, Kahn writes. Google introduced “search generative experience,” or SGE, but will it continue to generate comparable revenue?
“That question," Kahn notes, "is at the heart of Google’s innovator’s dilemma.”
You can read his full analysis here.
Sheryl Estrada
sheryl.estrada@fortune.com
