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Disagree. The market is reacting to Cloud turning a profit for the first time, and faster than expected.

alexb_ 3y ago
Cloud turning a profit is a good thing, and makes sense. But cloud is also a super competitive market - not so for Search or Ads. Those two feel like the places Google can rely on money coming from - revenue falling for those is worrying!
- Andys 3y ago
  If its so competitive, why are profit margins so high? I understand AWS is at nearly 30%.
- notatoad 3y ago
  "Cloud" for the purposes of financial reporting also includes the consumer cloud services workspace/gsuite/gdocs or whatever they're calling it now, right? not just the stuff at cloud.google.com
  - illiarian 3y ago
    From the report: "Google Cloud includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues from fees received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services."
- sounds 3y ago
  Ad spend globally may be down; can a comparison be made to competitors' ad revenue to come up with a baseline there? Youtube was a large contributor to growth in 2021-2022, and that engine appears to have slowed. (Not just the "Youtube ads" line that is separated out.) Most likely the market is reacting to these results not being any worse. Cloud gains were already priced into the stock, in my opinion.
- Vt71fcAqt7 3y ago
  I would question just how competitive cloud is. Companies with banks worth of cash and an existing army of technical knowhow are few and far between. The only companies that could enter the market right now are facebook and Apple.
  - hn_throwaway_99 3y ago
    By "super competitive market" he means between AWS, Azure and GCP.
- HDThoreaun 3y ago
  Search revenue is up, overall ad is down because youtube is down a tiny bit, but mostly because "google network" revenue is down a lot.
illiarian 3y ago
Cloud brought in ~1B dollars compared to previous quarter. Yet Google's overall net income is 1 billion lower than a year ago. So: - ad revenue is down (that's 80-90% of all of their revenue) - all their expenses are way up (cost of revenue 1B up, R&D expenses 2.3 B up, sales and marketing costs ~0.7 B up) - "other bets" losses increased are 400 million higher YoY - unallocated corporate losses are 3B higher YoY But google cloud (which includes both GCP and Google Workspace) is 191 million in profit. Must be nice, I guess.
- onlyrealcuzzo 3y ago
  If growth rates continue for 5 years, Cloud will print ~$10B per quarter in profits in 2028 - that's about 50% of search currently... That would make Cloud by itself one of the 50 biggest companies in the world in terms of profits... Companies are valued at profits for 10+ years. So Cloud continuing its promising growth trajectory is a very good thing for investors. Obviously growth rates are unlikely to stay as high as they are for 5+ years - but the outlook for Cloud & Google - is still very promising.
  - illiarian 3y ago
    > If If. Would. etc. It could also not grow, and slip back to losing billions. > Companies are valued at profits for 10+ years. Wat?
    - onlyrealcuzzo 3y ago
      > It could also not grow, and slip back to losing billions. It's been growing at similar rates for 13 years - rate of growth slowly decreasing. It's way more likely to continue at it's rough trajectory than to have a sudden massive reversal. But, sure, anything is possible. Google could also get obliterated by an alien civilization. Not gonna bet on that scenario, though.
- jsnell 3y ago
  > - unallocated corporate losses are 3B higher YoY $2.5 billion of that is charges related to the layoffs. > - all their expenses are way up (cost of revenue 1B up, R&D expenses 2.3 B up, sales and marketing costs ~0.7 B up) Likewise half of this (i.e. you're double counting). See the table on page 3. > - ad revenue is down (that's 80-90% of all of their revenue) 78% is not 80-90%. It's impressive that you managed to quote a ridiculously large range, and still get it wrong, in a discussiong about the earnings report. The ad revenue from Google properties, not from the display ad network, is up.
belter 3y ago
And since there are no details what is included on Cloud, number of new customers, example of large accounts that moved to Cloud, or info how much is Workspaces versus Enterprise Cloud customers...the moment those details leak, or if this is shown to be financial reporting engineering, the market will turn very sower, very quickly.

Cloud turning a profit is a good thing, and makes sense. But cloud is also a super competitive market - not so for Search or Ads. Those two feel like the places Google can rely on money coming from - revenue falling for those is worrying!

Andys 3y ago
If its so competitive, why are profit margins so high? I understand AWS is at nearly 30%.
notatoad 3y ago
"Cloud" for the purposes of financial reporting also includes the consumer cloud services workspace/gsuite/gdocs or whatever they're calling it now, right? not just the stuff at cloud.google.com
- illiarian 3y ago
  From the report: "Google Cloud includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues from fees received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services."
sounds 3y ago
Ad spend globally may be down; can a comparison be made to competitors' ad revenue to come up with a baseline there? Youtube was a large contributor to growth in 2021-2022, and that engine appears to have slowed. (Not just the "Youtube ads" line that is separated out.) Most likely the market is reacting to these results not being any worse. Cloud gains were already priced into the stock, in my opinion.
Vt71fcAqt7 3y ago
I would question just how competitive cloud is. Companies with banks worth of cash and an existing army of technical knowhow are few and far between. The only companies that could enter the market right now are facebook and Apple.
- hn_throwaway_99 3y ago
  By "super competitive market" he means between AWS, Azure and GCP.
HDThoreaun 3y ago
Search revenue is up, overall ad is down because youtube is down a tiny bit, but mostly because "google network" revenue is down a lot.

illiarian 3y ago

Cloud brought in ~1B dollars compared to previous quarter. Yet Google's overall net income is 1 billion lower than a year ago. So: - ad revenue is down (that's 80-90% of all of their revenue) - all their expenses are way up (cost of revenue 1B up, R&D expenses 2.3 B up, sales and marketing costs ~0.7 B up) - "other bets" losses increased are 400 million higher YoY - unallocated corporate losses are 3B higher YoY But google cloud (which includes both GCP and Google Workspace) is 191 million in profit. Must be nice, I guess.

onlyrealcuzzo 3y ago
If growth rates continue for 5 years, Cloud will print ~$10B per quarter in profits in 2028 - that's about 50% of search currently... That would make Cloud by itself one of the 50 biggest companies in the world in terms of profits... Companies are valued at profits for 10+ years. So Cloud continuing its promising growth trajectory is a very good thing for investors. Obviously growth rates are unlikely to stay as high as they are for 5+ years - but the outlook for Cloud & Google - is still very promising.
- illiarian 3y ago
  > If If. Would. etc. It could also not grow, and slip back to losing billions. > Companies are valued at profits for 10+ years. Wat?
  - onlyrealcuzzo 3y ago
    > It could also not grow, and slip back to losing billions. It's been growing at similar rates for 13 years - rate of growth slowly decreasing. It's way more likely to continue at it's rough trajectory than to have a sudden massive reversal. But, sure, anything is possible. Google could also get obliterated by an alien civilization. Not gonna bet on that scenario, though.
jsnell 3y ago
> - unallocated corporate losses are 3B higher YoY $2.5 billion of that is charges related to the layoffs. > - all their expenses are way up (cost of revenue 1B up, R&D expenses 2.3 B up, sales and marketing costs ~0.7 B up) Likewise half of this (i.e. you're double counting). See the table on page 3. > - ad revenue is down (that's 80-90% of all of their revenue) 78% is not 80-90%. It's impressive that you managed to quote a ridiculously large range, and still get it wrong, in a discussiong about the earnings report. The ad revenue from Google properties, not from the display ad network, is up.

belter 3y ago

And since there are no details what is included on Cloud, number of new customers, example of large accounts that moved to Cloud, or info how much is Workspaces versus Enterprise Cloud customers...the moment those details leak, or if this is shown to be financial reporting engineering, the market will turn very sower, very quickly.