Google’s cloud business turns profitable for the first time on record

Google has poured money into its cloud computing business to compete Amazon And Microsoft. These heavy investments finally generate profits.

Alphabet Google said Tuesday that Google’s cloud business was profitable for the first time in three years that it reported operating metrics for the division.

The segment generated $191 million in operating profit on $7.45 billion in revenue in the first quarter, according to Alphabet’s income statement. In the prior year quarter, the unit posted a loss of $706 million on revenue of $5.82 billion.

The cloud business includes Google Cloud Platform, which leases cloud infrastructure and services that companies can use to build and run their own applications, as well as Google Workspace productivity software subscriptions. Together, the company now accounts for 10% of Alphabet’s total revenue. Cloud customers include German BankMajor League Baseball, PayPal And UPS.

Google is vying to win business from big companies and government agencies deciding between major tech vendors as they move from traditional data centers to the cloud and rely on more compute-intensive applications involving intelligence artificial. Amazon Web Services, the cloud infrastructure leader, popularized the market in the mid-2000s and has been profitable quarterly since 2014. Microsoft, the industry’s second largest player, does not report profitability figures for its Azure unit.

Alphabet began disclosing cloud revenues in 2020, and the following year began disclosing the extent of its operating losses.

Last week, Alphabet restated operating profit for cloud and its other segments, leading to lower cloud losses in 2021 and 2022. The restated figures show the cloud unit recorded a loss of operating of $186 million in the fourth quarter, compared to $480 million before the change, for example.

“Certain costs associated with enterprise initiatives supporting consumer-facing activities, previously reflected in unallocated enterprise costs, are now allocated to Google services; and centrally managed shared research and development activities, including our shared development tools, are now allocated based on an updated measure of relative benefit from services,” Alphabet said in a deposit.

“As a result of these changes, a greater portion of previously unallocated enterprise costs are being allocated to our segments, and a greater portion of certain previously allocated costs are being allocated to our consumer-facing Google Services products and less to consumer-facing products. ‘Google Cloud company.

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