Google’s Profits Just Tanked

WebProNews
Google’s Profits Just Tanked

Google turned in its quarterly results, posting a massive decline in profits year-over-year.

Google reported $69.1 billion in revenue for the quarter. While this was a 6% increase over the year-ago quarter, it pales in comparison to that quarter’s 41% growth rate.

“We’re sharpening our focus on a clear set of product and business priorities,” said Sundar Pichai, Alphabet CEO. “Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long term and being responsive to the economic environment.”

“Our third quarter revenues were $69.1 billion, up 6% versus last year or up 11% on a constant currency basis,” said Ruth Porat, Alphabet CFO. “Financial results for the third quarter reflect healthy fundamental growth in Search and momentum in Cloud, while affected by foreign exchange. We’re working to realign resources to fuel our highest growth priorities.”

Interestingly, outside of its core ad business, there weren’t too many bright spots. Google Cloud was one of the only ones, with its revenue growing 38% to come in just under $6.9 billion. At the same time, however, the division’s losses widened from $644 million to $699 million.

Despite Google Cloud impressive growth, some experts believe it’s not enough, given the company’s third-place position in the market.

“Google has to grow more than 50% a year to play catch up. Overall cloud market has a lot of room for growth, and this is the savior for Microsoft and Amazon earnings,” Ray Wang, principal analyst at Constellation Research, told CIO.

Wang wasn’t alone in that sober evaluation.

“Google’s cloud results (38% growth) are better than Microsoft’s Cloud growth of 20%. But with a small base compared to Microsoft and AWS, the growth expectations are higher from Google Cloud,” said Pareekh Jain, CEO of EIIRTrend & Pareekh Consulting. “Google Cloud’s growth rate though slowing down should be higher than AWS and Microsoft. It should capitalize on growth opportunities in underpenetrated geographies. It should also become profitable in the coming quarters, taking some hard decisions like shutting down Google Cloud IoT.”

Google’s Profits Just Tanked
Matt Milano

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