GOOGL Alphabet Inc.

Operator (Operator): Welcome, everyone. Thank you for standing by for the Alphabet First Quarter 2026 Earnings Conference Call. The operator provided instructions on how to ask questions. I would now like to hand the conference over to your speaker today, Jim Friedland, Head of Investor Relations. Please go ahead. James Friedland (Head of Investor Relations): Thank you. Good afternoon, everyone, and welcome to Alphabet's First Quarter 2026 Earnings Conference Call. With us today are Sundar Pichai, Philipp Schindler and Anat Ashkenazi. Now I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the risk factors. We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at abc.xyz/investor. Our comments will be on year-over-year comparisons unless we state otherwise. And now I'll turn the call over to Sundar. Sundar Pichai (CEO): Thanks, Jim. Hi, everyone, and thanks for joining us today. It was a terrific quarter for Alphabet. Our momentum was on full display at Cloud Next last week and the month of May brings even more with I/O, Brandcast and Google Marketing Live. I hope you will tune in to see our progress. It's clear that our AI investments and full stack approach are driving performance across our business. In Search & Other revenue grew 19%. People love our AI experiences like AI Mode and AI overviews and they're coming back to Search more. Cloud accelerated again this quarter due to strong demand for our AI products and infrastructure. Revenue grew 63%, exceeding $20 billion for the first time and our backlog nearly doubled quarter-on-quarter to over $460 billion. Gemini Enterprise is seeing tremendous momentum with 40% growth quarter-over-quarter in paid monthly active users. In subscriptions, this was our strongest quarter ever for our consumer AI plans, primarily driven by adoption to the Gemini app. Overall, the number of paid subscriptions has now reached 350 million with YouTube and Google One being the key drivers. And our AI models have great momentum. First-party models now process more than 16 billion tokens per minute via direct API used by our customers, up from 10 billion last quarter. Today, I'll share our progress across the AI full stack then Search and Cloud, followed by YouTube and Other Bets. Starting with our AI infrastructure. It's the foundation of our full stack approach to AI, driving customer growth and product adoption. Our custom TPUs, Axion CPUs and the latest NVIDIA GPUs continue to form the industry's widest variety of compute options. NVIDIA GPUs are a core part of our AI accelerator portfolio and will be among the first to offer NVIDIA Vera Rubin NVL72 in addition to the Blackwell and Hopper-based instances already available. At Cloud Next, we introduced our 8th generation TPUs, individually specialized for training and serving and able to take on the most demanding agentic workloads. TPU 8t provides high-performance model training with 3x the processing power of Ironwood and 2x the performance. TPU 8i delivers cost-effective low latency inference with 80% better performance per dollar than the prior generation. This exceptional infrastructure powers world-class AI research that includes models and tooling, which continued to progress really well. Gemini 3.1 Pro continues to push the frontier in reasoning, multimodal understanding and cost. We have quickly expanded the Gemini 3.1 Series of models to offer more choices for developers, including our cost-efficient flash models. 3.1 Flash Live, our latest audio model, has improved precision and reasoning, making voice interactions more natural and intuitive. It's now powering conversational features in Search and in the Gemini app. Speech-to-text is now available in 70 languages. And with 3.1 Pro, our deep research agent got a big upgrade, including MCP support and native visualizations. Our generative media models are incredibly popular. Lyria 3 has generated over 150 million songs since launching on the Gemini app. Nano Banana 2 reached 1 billion images in nearly half the time of Nano Banana 1. And Veo 3.1 Lite is the most cost-efficient video model today. On top of this, we launched Gemma 4, our most intelligent open model. It's been downloaded over 50 million times in just a few weeks. In fact, our open models have now been downloaded over 500 million times. Looking ahead, we are focused on pushing the next frontiers of ... [transcript truncated at 5,000 chars — full text available via API]