Google Cloud is doing better, still a ways to go.
What you need to know
- Google reports its Q1 2021 earnings, with overall revenues slightly down from last quarter.
- Google Cloud brought in more revenue and narrowed its losses year over year and compared to last quarter.
- YouTube continues to be a catalyst for the company’s revenue growth thanks to ads.
Google’s parent company, Alphabet, has just released its Q1 2021 financial earnings report. Overall, the company managed to beat expectations, with a 31% year-over-year rise in revenue to $55.31 billion. Much of that was fueled by Search ads and YouTube, two of Google’s biggest revenue streams. At the same time, hardware saw a bit of a boost thanks to the Fitbit acquisition, giving Google access to the best fitness trackers on the market. The financial performance of Google Cloud was also in line with what analysts expected, signaling strong growth in the division.
As usual, Search ads fueled the bulk of Google’s revenue stream, bringing in $31.87 billion in revenue, up quite a bit from $24.5 billion reported at the same time last year. CEO Sundar Pichai spoke in the earnings call about how more people are taking to Google Search to find information on health, vaccines, and jobs, three things that have been big focuses throughout the COVID-19 pandemic.
YouTube revenue also saw large a large year-over-year increase, growing 49% to $6.01 billion. That’s undoubtedly due to the effects of the pandemic bringing more people to the social media site, especially with new features like YouTube Shorts, which now has 6.3 billion daily views. Not only that, but analyst such as Loup Ventures managing partner Gene Munster have pointed out the advantages of YouTube’s direct-response ads to help make ad products easily accessibly to consumers:
YouTube is now best positioned to deliver on something we’ve talked about for a decade, which is two people watching the same live event, but getting different ads. That’s an extremely valuable product for advertisers so there’s massive potential there.
As for Google Cloud, the business has started to see an increase in revenue and a decrease in losses. The business reported more than $4 billion in revenue compared to $3.83 billion last quarter when Cloud financials were first reported. Additionally, Google Cloud also reported an operating loss of nearly $1 billion compared to a $1.2 billion loss last quarter. Given that Google is still developing the business, the company remains committed to investing in its growth and expects increased scale over time. For example, it was pointed out how Google Cloud is helping with the vaccine rollout efforts and how Cloud partnerships with companies like Univision have expanded across the business like YouTube and will continue to help drive the business further.
It will be interesting to see how the rest of the year goes for Google and its parent company, Alphabet. Google Photos is gearing up to cut off its free unlimited cloud storage to many people, forcing users to pay to upload their photos, videos, and access to editing features. Google I/O 2021 is less than a month away and may bring a few hardware announcements. However, bigger product launches for devices like the Google Pixel 6 aren’t expected until later this year, along with the rumored Google Pixel Watch, both of which could help drive some of the company’s revenues if done right.
