Google Cloud posts first-ever operating profit despite slowing growth

In March, Google Cloud announced plans to open a second Middle Eastern region in Qatar. In October last year, Google announced it would open new regions across Austria, Greece, Norway, South Africa, and Sweden to supplement new regions announced in August for New Zealand, Malaysia, Thailand, and Mexico.

Reduced customer expenditure slowing revenue growth

Alphabet’s cloud computing arm continues to see a slowdown in revenue growth over the past few quarters.

For the March quarter, revenue growth for the unit came in at 28% year-on-year, four percentage points slower than the December quarter, which saw 32% year-on-year growth. The previous sequential quarter that ended in September registered an ever stronger growth of 38% year-on-year.

“In Q1, we continued to see slower growth of consumption as customers optimized GCP costs reflecting the macro backdrop, which remains uncertain,” Alphabet Chief Financial Officer Ruth Porat said during the earnings call.

The company, according to CEO Pichai, has been trying to help enterprise customers optimize their spending during this period of uncertainty.

“I would add, that we are leaning into optimization. I mean there is an important moment to help our customers, and we take a long-term view. And so, it’s definitely an area we are leaning in and trying to help customers make progress in their efficiencies where we can,” Pichai said during the call.