The search engine group was able to grow significantly in the cloud business.
(Photo: AP)
san francisco For years, Google parent Alphabet has invested billions in expanding its cloud business. Now the mega investment is paying off for the first time. For the most recent quarter, the company reported a profit of $191 million on sales of $7.4 billion for the first time in its history, according to company data released Tuesday night. In the same quarter last year, Google reported a loss of $706 million for its cloud business.
For years, companies have been shifting more and more of their business processes to central cloud providers. Business in much of the world is dominated by three companies: Amazon, Microsoft and Google. The retail group Amazon has been the market leader in this segment for many years. Microsoft follows in second place in terms of market share and Google in third place.
In contrast to the market leader Amazon, however, Google had to cope with considerable losses with its cloud ambitions over the past few years. Amazon popularized the market in the mid-2000s and has been profitable every quarter since 2014. Microsoft doesn’t release numbers on win or loss with the cloud.
The segment has reported heavy losses quarter after quarter since Alphabet Group first broke down numbers for cloud in 2020. That changed for the first time in the first quarter of 2023. Many large corporations in Germany also use the Google cloud, including Deutsche Börse and Deutsche Bank.
Exceeded market expectations
“We’re proud,” said Alphabet CEO Sundar Pichai. His company also beat other analysts’ expectations. Sales in the past quarter were slightly above market expectations at $70 billion.
Total profit for the quarter was $15 billion. This corresponds to $1.17 per share, analysts had expected $1.09 per share. Alphabet’s shares rose more than 5 percent in after-hours trading. The announcement of a share buyback program with a volume of 70 billion dollars also contributed to this.
Analyst Max Willens from Insider Intelligence praised: “The win in the cloud segment is remarkable and a testament to management’s diligence in steering cloud towards profitability.” However, Google remains well behind Amazon and Microsoft in terms of market share in the cloud business . In addition, growth is slowing down. Year-on-year growth was 28 percent.
Alphabet reported a slight decline in advertising revenue to $54.55 billion for the quarter from $54.66 billion in the same period last year. The decline is only the third in the company’s history since its IPO in 2004, but follows a 3.6 percent drop in the fourth quarter.
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