Alphabet's cloud surges while profit takes a different path
· BehindLines newsroom
Alphabet's accounts published on October 28 show two different movements in the third quarter: sales rise by 25%, while income available to holders of common shares falls. The Google parent cannot therefore sum up its performance in a single growth rate.
Cloud grows faster than the whole business
RTTNews reports total revenue of $127.58 billion, compared with $102.35 billion a year earlier. Google Cloud rises from $15.16 billion to $30.71 billion, an increase of 103%. Google Services reaches $96.30 billion, up 11%.
Cloud is thus growing much faster than the business as a whole, but its sales remain smaller than those of Google Services. A growth rate and a share of revenue describe different things.
In its statement filed with the US securities regulator, Alphabet attributes cloud growth in particular to demand for artificial intelligence infrastructure and solutions. That explanation comes from the company.
Operating income and final profit differ
RTTNews highlights the reversal in other income and expenses: this line represented net income of $12.76 billion a year earlier, compared with a net expense of $8.22 billion now, mainly related to losses on equity securities.
Alphabet's statement also reports a 30% rise in operating income. That measure does not include all the same components as final profit. An increase in the former therefore does not guarantee an increase in the latter.
What lies behind the $26.17 billion figure
The detailed table distinguishes net income of $26.468 billion from the $26.170 billion available to common shareholders after deducting $298 million in preferred stock dividends. It is the second amount that corresponds to the $26.17 billion cited by RTTNews.
Diluted earnings per common share are $2.12, compared with $2.87 a year earlier. These quarterly results, described in the document as unaudited, record a past period; they are not a forecast of revenue or profit.