Google Earnings – Q2 2018
This quarter, Google’s earnings reflected the revenue growth of its advertising businesses. Alphabet’s advertising revenue grew 12% year over year to $56.3 billion. YouTube’s sales climbed 5% compared to the same quarter last year. Google also reported a 36% increase in revenue for its cloud business, which has yet to turn a profit.
Alphabet’s advertising revenue grew 12% year over year to $56.3 billion
Alphabet’s second-quarter revenue came in ahead of expectations despite a slowdown in ad sales, which worried investors, but was more than offset by growth in other metrics. Its net sales increased 13% year over year and 16% in constant currency. Its results were in line with Wall Street estimates, and were driven by Google Search and Google Cloud.
While the company saw revenue growth in most of its businesses, its YouTube unit grew at a slower pace than other segments. Despite ad revenue growth of 12% year over year, the division has been facing challenges with competition from streaming video app TikTok. The company is also making moves to boost the YouTube experience. For instance, it is creating a streaming marketplace on its YouTube app, which will allow users to browse and subscribe to various streaming services. The company is also in negotiations with multiple streaming companies to become part of its “channel store.” These companies would pay Alphabet a share of subscriptions made through YouTube.
YouTube sales rose 5% compared to the same period in 2021
Alphabet, the parent company of YouTube, reported tepid second quarter ad sales growth of 4.8%, down from an 84% jump in the same period of last year. Despite that, executives are enthusiastic about connected TV and the potential for connected TV ads. Earlier this month, YouTube TV overtook Hulu as the top provider of live streaming TV.
The growth in advertising revenues was driven by strong consumer online activity and advertisers’ spending. YouTube also reported substantial ongoing revenue growth from its Google Cloud business. In addition, YouTube CEO Susan Wojcicki boasted of reaching 5 trillion YouTube Shorts views in just under three years, and said the company plans to experiment with new ways for Shorts creators to make money.
Google Cloud revenue increased about 36% year over year to $6.3 billion
Alphabet’s Google Cloud business generated $6.3 billion in revenue for the second quarter of 2018, up nearly 36 percent from the same period last year. While the cloud-based service is still far from profitability, it is showing signs of growth. Its operating loss for the quarter was $858 million, which is significantly higher than its operating loss of $591 million in Q2 2021. Alphabet CEO Sundar Pichai has highlighted the cloud’s success in working with brands and businesses.
Google Cloud revenue grew 36% year over year to $6.3 billion, exceeding market leader AWS’s growth rate of 33%, but trailed Azure’s growth rate of 40%. Though Google Cloud is experiencing a revenue growth lag, the company’s executives have expressed optimism for its future, saying that “there is still plenty of room for growth.” The company will continue to invest heavily in the cloud and cut costs in other areas, thereby gaining market share and achieving profitability sooner than expected.
Alphabet’s cloud business has yet to turn a profit
Alphabet’s cloud business has not turned a profit yet, but it’s making steady progress. For the quarter ending in March, the unit posted revenue growth of 45% year over year, up from $3.44 billion in the prior quarter. But it’s far from being profitable, with an operating loss of $858 million. Despite the growing popularity of cloud computing, Alphabet has not yet managed to turn a profit on its cloud platform.
The company has spent billions of dollars on advertising and has been able to withstand the lingering inflation. Alphabet has also been aggressive in its cloud business, buying cybersecurity companies Mandiant and Siemplify and integrating them into Google Cloud Platform. In a bid to compete with Microsoft and Amazon, it has been spending heavily on the cloud. While it isn’t yet profitable, Alphabet’s cloud business is an important part of its future.
