Advertising Company Google Turns a Profit On Something That’s Not Advertising

Posted on Saturday, May 6, 2023 by Ned Bellavance

Featured in this episode of Chaos Lever

Shit. Does that mean I have to stop calling them Advertising Company Google? What’s that? 78% of their revenue and 99% of their net income is still from Ads? Oh, good. Nevermind.

For Q1 2023, Google Cloud brought in $7.4B in revenue, an increase of 28% YoY. More impressive is that they had operating income of $191M, the first time that Google Cloud has ever been profitable.

I should point out that there is a vague “Corporate costs, unallocated” line that had $3.3B in losses, and they’ve slashed Capex spending from 2022 levels. If I wanted to make my cloud seem like it was finally in the black, I might shove some of that cost into a poorly defined category that serves as a catch-all for whatever I don’t want to include in cloud costs. And I might lower Capex if I’m not growing as fast as I used to so I have plenty of excess capacity.

I’m not saying that’s what’s happening here. I’m just saying some of that cost is paying out severances, and surely some of the people laid off worked for Google Cloud. And their growth has been slowing this year, just like the rest of the cloud hyperscalers. That’s it. I’m not saying anything else. Heavily implying? Of course. Saying? No, never.