Robust growth in its Google Search and Cloud segments helped Alphabet achieve a double-digit revenue increase in Q1 2022, but the company’s net income dropped 8% year on year.
Overall revenue rose 23% to $68 billion during the quarter, with Google advertising accounting for $54.7 billion of this total. Within advertising, revenue from its Google Search and other segment rose 24% to $39.6 billion. Google Services revenue (including advertising and other revenue) came in at $61.5 billion, up year on year from $51.2 billion. Elsewhere, Google Cloud revenue jumped 44% to $5.8 billion.
While Google Services posted operating income of $22.9 billion, Google Cloud continued to operate at a loss, though the $931 million it lost in Q1 was down from $974 million year on year. The company also recorded a loss of $1.2 billion in its Other Income and Expense category, which CFO Ruth Porat said on an earnings call was “driven by unrealized losses in the value of investments in equity securities.” All told, Alphabet’s profit fell 8% to $16.4 billion in Q1, down from $17.9 billion.
In Q2, Porat warned it expects to face tough comparisons to its 2021 figures, which benefitted from its rebound from a pandemic-related slump in 2020. It also expects continued headwinds from its pullback from Russia in the wake of the war in Ukraine. Porat said about 1% of Google revenues last year came from Russia, primarily from advertising.
That said, Alphabet does expect continued growth in Google Cloud. Alphabet CEO Sundar Pichai said that for the rest of 2022, he is excited for product innovation across a number of key areas, including data, analytics, cybersecurity and open multi-cloud.
“When I look at the innovation in the product pipeline and the overall demand we are seeing and how early our journey is, there's definitely a lot to look forward to,” he said. “Overall, the execution has been great. We are scaling up, particularly in our go-to-market as well. And I think that will play out well.”