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Google posts $50bn in ads revenue as it looks to broaden the business

Google reported second-quarter revenues of $61.9bn driven by spending on ads, but the company’s CEO sees the business moving into new areas

Alphabet, parent company of Google, posted consolidated revenues of $61.9bn for the second quarter of 2021, up 62%.

Total Google Services revenues were $57.1bn, up 63%. Google Search also reported “other advertising revenues” of $35.8bn. Overall, Google made $50.4bn in revenue from advertising during the quarter. Google Cloud posted revenues of $4.6bn for the quarter, up 54%.

Sundar Pichai, CEO of Google and Alphabet, said: “In Q2, there was a rising tide of online activity in many parts of the world, and we’re proud that our services helped so many consumers and businesses. Our long-term investments in AI [artificial intelligence] and Google Cloud are helping us drive significant improvements in everyone’s digital experience.”

In the transcript of the earnings call, posted on the Seeking Alpha financial website, Pichai discussed the broad digital shift customers were taking in looking for digital transformation. “Depending on the sector they are in, they look to Alphabet as a digital partner, and we try to bring the broadest solution set that’s possible across our capabilities, and that’s been working well,” he said.

According to Pichai, most of the company’s cloud customers are in conversations with Google because they are concerned about security of their supply chain or are trying to understand the shift to digital and investing more in data analytics. He said the shift to a hybrid workforce is also driving some organisations to consider Google Workspace.

For its customers in the retail sector, Pichai said Google can bring in its expertise across advertising and commerce, along with the partnerships it has.

Asked whether the company had any plans to shift focus from the advertising market, Pichai said: “We have an approach of being helpful across certain important attributes. And we do deep investments in computer science and AI to build services. Out of that, naturally, there is diversification over time. You look at the cloud, and within the cloud, we have both GCP and Workspace. And longer term, we have efforts like Waymo as well.

“We take a long-term view. We start from first principles, focusing on both investing in deep technology and solving user problems. And out of that, I think you have a set of diversified models that emerge.”

However, Pichai said the market for advertising and e-commerce still had “a lot of headroom”.

Discussing the results, Martin Garner, COO at analyst firm CCS Insight, said: “Google Cloud is back up to pre-pandemic growth rates, with revenue up 54% over the year, ahead of market growth, and with a number of marquee customers signing during the quarter. Losses improved, though the division is clearly still early in a major investment phase as it tries to gain on the bigger competitors.

“Google Cloud is positioned mainly on its strengths in security, AI and machine learning, as well as Workspace and – like other cloud providers – it is increasingly pushing vertical solutions to address the needs of key sectors better.”

Read more about GCP

  • Investing in datacentres and bringing on former SAP executives, Google is hoping to turn its cloud platform into a public cloud destination for SAP customers.
  • McDonald’s uses the Google Cloud Platform to drive its personalised marketing efforts, which has helped the company grow and know its customers better.

Read more on Platform-as-a-Service (PaaS)

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