Trend: Google Cloud experienced a significant revenuegrowth, with an increase of $6.81B from 2022 to 2023, indicating a robust expansion in its cloud segment.
Profitability Turnaround:
2022: Operating Loss of -$1.92B
2023: Operating Income of $1.72B
Key Highlight: In 2023, Google Cloud’s business turned profitable, showcasing a remarkable financial turnaround from a $1.92B loss in 2022 to a $1.72B profit in 2023. This marks a pivotal moment for the cloud segment, emphasizing its growing efficiency and success in the competitive cloud market.
Strategic Implications:
The revenuegrowth and profitability indicate Google Cloud’s effective strategy and execution in expanding its cloud services.
Turning profitable in 2023 underlines Google Cloud’s ability to optimize its operations and cost management, enhancing its value proposition in the cloud industry.
Market Position and Future Outlook:
This performance strengthens Google Cloud’s position in the cloud services market, setting a positive trend for future growth and competitiveness.
The profitability in 2023 is a significant milestone, likely to attract more investors and customers, driving further innovation and expansion in cloud solutions.
Google is primarily owned by its founders, Larry Page and Sergey Brin, who have more than 51% voting power. Other individual shareholders comprise John Doerr (1.5%), a venture capitalist and early investor in Google, and CEO, Sundar Pichai. Former Google CEO Eric Schmidt has 4.2% voting power. The most prominent institutional shareholders are mutual funds BlackRock and The Vanguard Group, with 2.7% and 3.1%, respectively.
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2023, Alphabet generated over $175B from Google search, $31.51B billion from the Network members (Adsense and AdMob), $31.31B billion from YouTube Ads, $33B from Google Cloud, and $34.69B billion from other sources (Google Play, Hardware devices, and other services). And $1.53B from its other bets.
Google is an attention merchant that – in 2022 – generated over $224 billion (almost 80% of revenues) from ads (Google Search, YouTube Ads, and Network sites), followed by Google Play, Pixel phones, YouTube Premium (a $29 billion segment), and Google Cloud ($26.2 billion).
Of Google’s (Alphabet) over $307.39 billion in revenue for 2023, Google also generated for the first time, well over 1.5 billion dollars in revenue from its bets, which Google considers potential moonshots (companies that might open up new industries). Google’s bets also generated a loss for the company of over $4 billion in the same year. In short, Google is using the money generated by search and betting it on other innovative industries, which are ramping up in 2023.
In 2023, Alphabet’s (Google) Cloud Business generated over $33 billion within Alphabet’s Google overall businessmodel, and it was also profitable, with over $1.7 billion in profits. Google Cloud is instrumental to Google’s AI strategy.
Google is an attention merchant that – in 2023 – generated $237.85 billion (over 77% of its total revenues) from ads (Google Search, YouTube Ads, and Network sites), followed by Google Play, Pixel phones, YouTube Premium (a $31.5 billion segment), and Google Cloud (over $33 billion).
The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years, Google has been able to reduce its traffic acquisition costs and, in any case, to keep it stable. In 2023 Google spent 21.39% ($50.9 billion) of its total advertising revenues ($237.8 billion) to guarantee its traffic on several desktop and mobile devices across the web.
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, and it reported more than $31B in revenues by 2023. YouTube also makes money with its paid memberships and premium content.
In 2023, Google’s search advertising machine, generated over 175 billion dollars. Whereas Microsoft’s Bing generated 12.2 billion dollars. Thus, as of 2023, Google’s search advertising machine is over 14x larger than Microsoft’s search advertising machine.
Google makes most of its money from advertising. Indeed total advertising revenue represented nearly 78% of Google’s (Alphabet) overall revenues for 2023. Google Search represented nearly 57% of Google’s total revenues. Google generated $307.39B in revenues in 2022, and $73.79B billion in net profits.
In 2023, Google generated $307.39 billion, comprising $175B in Google Search, $31.51B in YouTube ads, and $31.31B in Google network revenue. $34.69B in other revenue, $33B in Google cloud, $1.53B in other bets.
In 2023, Google generated 237.85B in revenue in advertising, which represented over 77% of its total revenues of $ 307.39 B. In 2022, Google generated $224.47B in revenues from advertising, which represented almost 80% of the total revenues, compared to $282.83B in total revenues. Therefore, most of the revenues from Alphabet, the mother company of Google, come from advertising.
At the end of December 2022, Google had over 190,000 employees. On January 20, Google announced the layoff of 12,000 employees within the company, thus bringing the number of total employees by December 2023 to 182,502 full-time employees.
Google generated $1,684,332 per employee in 2023, compared to $1,486,779 per employee in 2022. As of January 2023, as the company announced a mass layoff, it brought back its revenue per employee at $1,586,880, still behind the peak in 2021, for $1,840,330.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
