Alphabet’s Google Cloud unit failed to dig itself out of the red, despite posting first quarter revenue that increased a whopping 45% year on year.
During an earnings call, Alphabet CEO Sundar Pichai highlighted “three distinct market trends” driving growth in Google Cloud, citing interest in its Data Cloud for analytics and artificial intelligence (AI) workloads, cloud infrastructure for enterprise IT overhauls and its Workspace product for hybrid work environments.
“We are winning large IT transformation deals with the companies that are migrating their data centers to Google Cloud,” he said. “Multi-cloud remains a differentiator as it provides the easiest and most open development environment for customers like Telus, allowing them to access and move their data between various plants.”
Consolidated Alphabet revenue of $55.3 billion was up 32% year on year in Q1 2021 from $41.2 billion, with Google Search and other advertising revenue accounting for the bulk of this ($31.9 billion). Google Cloud revenue of $4 billion was up from $2.8 billion in the year-ago period.
Total net income skyrocketed from $6.8 billion to $17.9 billion, thanks in part to a $4.8 billion boost CFO Ruth Porat on the earnings call attributed to “unrealized gains in the value of investments in equity securities.” Google Cloud remained in the hole, although it significantly narrowed its loss to $974 million from $1.7 billion in the year-ago quarter.
Porat reiterated the company expects Google Cloud’s “operating results should benefit from increased scale over time,” but noted for now it remains “focused on continuing to invest to build the cloud organization for long-term performance.”
Pichai added Alphabet plans to funnel improvements in its AI technology into its Google Cloud platform, stating “I think there's a lot more progress coming down the pipe, and so I'm pretty excited, and it's why I feel Google – GCP – will be differentiated over time as our competitive advantage plays out here.”