Google Cloud crosses $6B revenue mark but losses climb

Google Cloud revenue continued to grow at a healthy clip in Q2 2022, but the unit’s operating loss jumped 45% year on year. Ruth Porat, CFO of Google Cloud’s parent company Alphabet, said during an earnings call executives have debated the tradeoffs between revenue growth and profitability, but ultimately believe investing for the long-term opportunity is the right call.

During the quarter, Google Cloud revenue rose 36% to $6.3 billion. Alphabet CEO Sundar Pichai noted this as the first time sales have crossed the $6 billion mark. He stated demand has remained strong across all geographies, including North America, Europe, Latin America and Asia, but added the current macro economic environment is playing a role in cloud spending decisions.

“You do see a varying mix of some customers impacted in terms of their ability to spend, some customers just slightly taking longer times, and maybe in some cases, thinking about the term for which they’re booking and so on,” he explained. “But I don’t necessarily view it as a longer term trend as much as working through the macro uncertainty everyone is dealing with.”

Pichai highlighted momentum across Google Cloud Platform (GCP) and Workspace, as well as its new Google Public Sector business. The latter launched in June to target government agencies and public institutions looking to use cloud technology to speed their digital transformations.

Despite this, Google Cloud’s operating loss jumped to $858 million in the quarter, up from $591 million. Still, Porat said Alphabet executives “very much believe in the long-term growth [opportunity] and believe this is the right level of investment across the business, go to market, the product teams continuing to build it out globally.”

Consolidated Alphabet revenues of $69.7 billion were up 13% year on year, though net income dipped from $18.5 billion to $16 billion. Google Search continued to be the largest contributor to revenue, with sales of $40.7 billion.