Google Cloud Reports First-Ever Profit in Q1 2023

The company also announced a recasting of previous results due to a change in the way it attributed cost allocation, which narrowed its previously reported losses. Google Cloud Platform's (GCP) losses for 2022 were recast as follows: Q1 $706 million from the previously reported $931 million; Q2 $590 million from $858 million; Q3 $440 million from $699 million; and Q4 $186 million from $480 million.

As a whole, Alphabet reported revenues of $69.787 billion, up $1 billion from Q1 2022, and income of $15.05 billion, down $1.38 billion. Ruth Porat, Alphabet and Google's CFO, said that the resilience in search and momentum in cloud resulted in Q1 consolidated revenues of $69.8 billion, up three percent year over year, or up six percent in constant currency. She added that the company remains committed to delivering long-term growth and creating capacity to invest in its most compelling growth areas by re-engineering its cost base.

During the earnings call, Google CEO Sundar Pichai noted that the company is making efforts to be more efficient with its infrastructure. He said, "We have significant multiyear efforts underway to create savings, such as improving machine utilization and finding more scalable and efficient ways to train and serve machine learning models. We are making our data centers more efficient, redistributing workloads and equipment where servers aren't being fully used. This is important work as we continue to significantly invest in infrastructure to drive our many AI opportunities."

CFO Porat noted a continued slowdown in cloud spending by customers, citing that in Q1, they continued to see slower growth of consumption as customers optimized GCP costs, reflecting the macro backdrop, which remains uncertain. She added that the company remains focused on driving long-term profitable growth in Cloud while continuing to invest given the substantial opportunity.

Overall, the first-ever profit posted by Google Cloud is a significant achievement and a reflection of the company's efforts to improve efficiency and drive growth in its cloud business. The continued investment in infrastructure and AI opportunities, along with efforts to reduce costs, position Google well for long-term success in the highly competitive cloud market.