Alphabet’s Google Cloud unit posted strong year-on-year sales growth in Q3 2021, but remained in the red despite nearly halving its operating loss.
Google Cloud revenue rose 45% in the quarter to $4.99 billion, up from $3.44 billion in Q3 2020. But it still failed to turn a profit, posting an operating loss of $644 million. That figure was nearly half the $1.2 billion operating loss it posted in the year-ago quarter, but up slightly sequentially from $591 million in Q2.
During an earnings call, CEO Sundar Pichai noted revenue growth from Google Cloud Platform continued to outpace Cloud overall, but did not provide specific figures.
On Twitter, Moor Insights and Strategy founder Patrick Moorhead noted Google’s cloud business is “so close to a $20B per year run-rate” and is now “much bigger than Adobe.” But Futuriom Principal Analyst Scott Raynovich told Fierce the company and Google Cloud chief Thomas Kurian still have more work to do.
“Google has made significant progress in cloud under Kurian, but this quarter was a bit of a disappointment as cloud growth rate slowed a bit and indicated it did not gain any share from Microsoft or Amazon,” he said. “The focus on cloud-services such as AI is good, but Google still has to prove it can sell large cloud contracts to enterprise.”
RELATED: Google Cloud revenue climbs 54% in Q2
On the call, Pichai again pointed to Google Cloud’s data and analytics, cybersecurity and multi-cloud capabilities as key points of differentiation that were drawing customers in. But he added “above all, I think we are very, very focused on industry value propositions, so really sharpening our solutions by vertical.” That strategy, he said, has helped it reel in some bigger deals recently “and we’ll continue doing that.”
Consolidated Alphabet revenues increased 41% year on year to $65.1 billion, up from $46.2 billion, while net income jumped 68% to $18.9 billion. Advertising, including from Search and YouTube, contributed the lion’s share of revenue with $53.1 billion, with the remainder coming from Google Cloud, Google other ($6.7 billion) and Other Bets ($182 million).