Google Cloud makes a profit for the first time in fifteen years

Google parent company Alphabet has made a profit with its cloud service for the first time in fifteen years. In the first quarter of this year, Google Cloud achieved a profit of $191 million on revenue of $7.4 billion. YouTube, on the other hand, once again turned a loss.

Alphabet writes in the presentation of its quarterly figures that Google Cloud’s revenue rose sharply from $5.8 billion to $7.4 billion, but profit was positive for the first time since the division was founded. Google earned $191 million in the first months of the year, a profit of 2.6 percent. The figures do come with the caveat that Google includes its software-as-a-service office package Workspace in the Cloud division.

Google founded the Cloud division in April 2008. The company hoped to compete with the two other major cloud service providers, Amazon’s AWS and Microsoft’s Azure. Although Google is the third largest player on the market, the company never matched the two in terms of size and turnover. However, the company continued to invest a lot of money in Cloud and that now seems to be paying off, as Cloud is turning a profit for the first time.

Google has only officially itemized the division in annual and quarterly reports since 2020, but acknowledges that this is the first time it has made a profit. AWS has been making a profit since 2014, but Microsoft never mentions specific figures for Azure.

Alphabet mentions as an explanation for the profit that certain costs related to consumer products and developer tools now fall under the Google Services department. These were previously divided between Google Services and Google Cloud, but the company now says that part of those costs have been completely removed from Cloud and have become part of Services.

Google also lost sales with YouTube. Advertising revenue on the platform fell 2.6 percent from a year ago to $6.69 billion. This is the third quarter in a row that advertising revenue has fallen. According to Google, advertisers are tightening their budget now that the economy is doing badly.

Despite that small decline in turnover, Alphabet has little to complain about. The first quarter generated revenue of $69.8 billion, an increase of more than $700 million from a year ago. This is offset by a declining net profit; Google earned $15 billion, up from $16.4 billion a year ago.