Alphabet released their earnings report for 2023 Q3, reporting an 11% revenue growth in the third quarter. "I'm pleased with our financial results and our product momentum this quarter," said Google CEO Sundar Pichai. "This quarter, we introduced AI-driven innovations across Search, YouTube, Cloud, our Pixel devices, and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come.” Ruth Porat, CEO and CFO, stated, "The fundamental strength of our business was obvious again in Q3 with $77 billion in revenue, up 11% year over year, led by strong growth in Search and YouTube, and momentum in Cloud. We remain committed to prudent capital allocation as the key to long-term financial success.
For the first time in over a year, advertising was a major contributor to the double-digit growth. The United States brought in the most money (at $36,254 billion), followed by Europe and the Middle East and Asia-Pacific. Revenue of $76.69 billion fell short of the $75.97 billion predicted by analysts at LSEG for the company's cloud division. Google Cloud generated $8.41 billion in income, while YouTube advertising brought in $7.95 billion. The price of acquiring new customers increased by 1% to $12.64 billion.
After increasing at a single-digit rate for four consecutive quarters, revenue increased by double digits in Q1. Due to the slowing economy and rising competition from TikTok, Google's core advertising business suffered last year. The advertising industry brought in $59.65 billion during the third quarter, up from $54.48 billion during the same period in 2016. YouTube's ad income of $7.95 billion was higher than predicted by industry experts. However, cloud sales landed at $8.41 billion, more than $20 million short of projections.
Alphabet has been heavily investing in its cloud division in an effort to catch up to market leaders Amazon Web Services and Microsoft Azure. As more businesses move their data and applications to the cloud, generative AI is becoming increasingly crucial. Despite the division's lackluster performance, cloud growth increased by 22% year over year, more than doubling the company's overall growth rate. The company also reversed its operating loss from $440 million to a profit of $266 million.
Although cloud growth was steady across countries, industries, and products, CFO Ruth Porat noted that the increase in speed "reflects the impact of customer optimization efforts." She has been CFO for eight years, but she stated in July that she will be moving on to become the company's chief investment officer.
