Google’s parent company’s net income was $15.05 billion, compared to $16.44 billion in the previous year, with earnings before certain costs coming to $1.17 per share, higher than the expected $1.07 per share. Revenue for the quarter topped $69.79 billion, beating analysts’ predictions of $68.9 billion.
Since its establishment, Alphabet’s cloud computing unit, Google Cloud, has turned a profit for the first time. The unit’s $191 million operating income on $7.45 billion in revenue marked a significant improvement from the $706 million loss on sales of $5.82 billion that it reported a year ago.
Google Cloud includes Google Cloud Platform, which leases servers, storage, and various other services for other companies to build and run software, as well as revenue from Google Workspace, the firm’s productivity software.
Google has been competing for cloud computing market share
The cloud has been a significant source of profit for Amazon Web Services, while it remains unclear whether Microsoft’s Azure cloud division is profitable because it does not report profitability figures.
Alphabet’s cloud revenue was first reported in 2020, and it has lost money since then, but last week, Alphabet filed with the US Securities and Exchange Commission to state that it was restating its operating income for its cloud and other business segments, resulting in lower losses in 2021 and 2022.
The good news for Alphabet’s cloud unit compensated for the declining ad revenue, which beat expectations at $54.55 billion but was lower than the previous year. Google Search and other revenue came to $40.36 billion, up from $39.62 billion in the previous year, while YouTube ad revenue fell slightly to $6.69 billion.
Alphabet has been facing pressure from the rapidly emerging artificial intelligence industry, which has favored chatbots like OpenAI LP’s ChatGPT.
Earlier this year, the company announced the most significant job cuts in its history, with almost 6% of its workforce, or around 12,000 staff, being laid off. Alphabet has also made other cutbacks, such as reducing employee services and equipment.
For instance, the company has shifted from high-end laptops to more affordable Google Chromebooks. The layoffs, announced in January, led to a $2.6 billion charge, negatively affecting Alphabet’s overall profit.