Google has continued to place great bets on the Google Cloud, and, while it is seeing accelerated revenue growth, its losses are also increasing. For the first time today, Google Revealed Operating income / loss for the Google Cloud business unit in today’s quarterly revenue. Google Cloud lost $ 5.6 billion in fiscal year 2020, ending on December 31. This is revenue of $ 13 billion.
While this may sound a little terrible at first glance (cloud computing needs to be very profitable, after all), there are different ways of looking at it. On the one hand, losses are growing at $ 4.3 billion in 2018 and $ 4.6 billion in 2019, but revenue is also seeing strong growth, from $ 5.8 billion in 2018 and $ 8.9 billion in 2019. What we are seeing here, more than that, is Google investing heavily in its cloud business.
Google’s cloud entity, with Thomas Kurian as its chief executive officer, includes all of its cloud infrastructure and platform services as well as the Google workspace (which you still refer to as the G Suite). And this is exactly where Google is investing so much. Data centers, after all, do not come cheap, and Google Cloud launched Four new regions in 2020 And started work on others. It is on top of its investment in its core services and multiple acquisitions.
“On the cloud, we see how early customers are in this shift,” said Sundar Pichai, CEO of Alphabet, Google. “We see a big time ahead – and certainly our momentum in terms of market dynamics and market is the framework in which we are thinking about the scale of investment – and the speed of investment. Obviously, this is an area in which you will live [unintelligible] Contributes more – and economies of scale also begin to work. But we are definitely investing further to ensure that we are able to serve customers globally in all the offerings they are interested in. “
Ruth Porat, CFO of Google and Alphabet, said, “Our strong fourth-quarter performance, with revenue of $ 56.9 billion, was driven by search and YouTube, as consumer and business activity recovered earlier in the year. ” “Google Cloud Revenue was $ 13.1 billion for 2020, with significant ongoing momentum, and we are focused on delivering value given the opportunities that we see.”
In today’s earnings call, Porat said the workspace is seeing strong growth among large enterprises “who are signing meaningful, long-term agreements.”
For now, however, Google’s core business, which saw a strong rebound in its advertising business in the last quarter, is subsidizing its cloud expansion.
Meanwhile, in Seattle, AWS today reported revenue of $ 12.74 billion. In the last quarter alone And operating income of $ 3.56 billion. For 2020, AWS had operating income of $ 13.5 billion.