Dive Brief:
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Google parent Alphabet reported higher profits and revenues in the third quarter, but analysts who want to know more about its cloud business will have to do some digging.
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The company's non-advertising revenue — a category that includes its cloud business — grew 39% year-over-year to $2.43 billion.
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Alphabet/Google doesn't typically break out revenue for individual products, but The Wall Street Journal notes Alphabet executives have pointed to the cloud business in the past as a major driver of growth in the non-advertising revenue category.
Dive Insight:
It's probably fair to consider Google part of a three-legged stool in the cloud business, with AWS and Microsoft serving as the other big players for now. But it's not easy to determine just how well Google's cloud business is doing because of Alphabet's standing policy to not break out individual product results in granular detail.
But the cloud business is becoming so big that this might change, Alphabet executives hinted in a conference call with analysts.
"We constantly look to assess if or when additional data makes sense given specific performances. And when we went through the third quarter results, that has been our intent with all of the color commentary on cloud," Alphabet CFO Ruth Porat said.
"I guess the only other thing to add is that the largest percentage growth year on year in our other revenue line, actually even across all of our revenue lines, was in our Google Cloud platform, and that reflects significant momentum in compute and storage," Porat added.
Despite the growing cloud segment, it's advertising that drives the train at Alphabet. The company's total revenue went up 20% year-over-year to $22.45 billion for the quarter. Still, the non-advertising revenue is growing faster on a percentage basis than total revenues, and that trend may continue as Alphabet's advertising model is pressured by cheaper mobile device ads.
"Mobile search and video are powering our core advertising business and we’re excited about the progress of newer businesses in Google and Other Bets," Porat said in a statement. The "Other Bets" category is where Alphabet puts its experimental businesses such as driverless cars, and it had an $865 million quarterly loss. Still, that's better than the $980 million loss in the same quarter a year ago, and that should help assuage the investors who have complained about the spending in this experimental area.