Google Cloud is growing rapidly, but it is still unprofitable.
In its latest quarterly earnings report, Microsoft says cloud services drove revenue increases, while Alphabet posted higher revenue, but didn’t meet Wall Street expectations.
Microsoft posted its fiscal Q3 2022 earnings and Alphabet, Google’s parent company, reported its Q1 earnings on Tuesday.
Microsoft saw revenue jump 18%, to $ 49.4 billion, and profit reached $ 16.7 billion, up 8%. Alphabet benefitted from Google Cloud’s strength as its revenue increased 23%, to $ 68 billion, and profit exceeded $ 16 billion.
Satya Nadella is Microsoft’s chairman and CEO.
“Going forward, digital technology will be the key input that powers the world’s economic output,” he said. “Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience and do more with less.”
Sundar Pichai is CEO of Alphabet and Google.
“Q1 saw strong growth in search and cloud, in particular, which are both helping people and businesses as the digital transformation continues,” he said. “We’ll keep investing in great products and services, and creating opportunities for partners and local communities around the world.”
Microsoft Beats Expectations
Microsoft beat expectations on the top and bottom lines, CNBC said. Its intelligent cloud segment, which contains Microsoft’s Azure public cloud for application hosting, along with SQL Server, Windows Server and enterprise services, generated more than $ 19 billion in revenue, up 26% compared to the year-ago quarter.
Revenue from Azure and other cloud services increased 46% in the quarter, compared to 46% growth in the prior quarter.
Microsoft’s productivity and business processes segment, which includes Office productivity software, LinkedIn and Dynamics, reported $ 16 billion in revenue in the quarter, up about 17%.
Amy Hood is Microsoft’s executive vice president and CFO.
“Continued customer commitment to our cloud platform and strong sales execution drove better-than-expected commercial bookings growth of 28% and Microsoft Cloud revenue of $ 23.4 billion, up 32% year over year,” she said.
Alphabet missed on top and bottom lines for the first quarter, CNBC said.
According to Yahoo! Finance, Alphabet’s first-quarter sales were roughly in line with estimates, with the tech giant showing strength in its key search advertising and cloud businesses. However, earnings were lower than expected as costs mounted. In addition, growth in its YouTube business has slowed sharply compared to last year.
Google Cloud, while still smaller than incumbents like Amazon Web Services (AWS) and Microsoft Azure, has been growing rapidly. However, it still remains unprofitable. The unit grew sales 43% for the first quarter, to reach $ 5.8 billion. However, Google Cloud’s operating losses totaled $ 931 million. Wall Street was looking for a loss of $ 893.2 million.
Ruth Porat is CFO of Alphabet and Google.
“We are pleased with Q1 revenue growth of 23% year over year,” she said. “We continue to make considered investments in capex, R&D and talent to support long-term value creation for all stakeholders.”
Jared Cheney is vice president of services at SoftwareOne, a Google Cloud partner.
“Google Cloud’s earnings today showcase that the cloud computing industry is continuing to grow in both competition and revenue with no signs of slowing down,” he said. “Google has made strides this quarter to stand out among the competition including its recent acquisition of Mandiant to elevate its cybersecurity offerings and ensure that infrastructures across all workplaces and industries are safe. Google’s response to increase their security offerings in light of increased cybersecurity threats has been extremely beneficial, both for their own earnings outcomes and for ensuring their clients remain seamlessly protected.