It’s earnings season again, meaning companies big and small are required to publicly report their results for the first three months of the year.
Microsoft and Alphabet report on the same day, giving us a really interesting contrast between two of the technology behemoths.
Overall, the results for both companies are very strong, with growing revenue, big profits, and expansions in almost all core product areas. But they do diverge in one clear way: Alphabet is feeling the squeeze on its profits, driven in part by Apple’s changes to how third-party ads work on iOS.
Alphabet reported strong Q1 results in general, with revenue rising to $68 billion. At the same time, its traffic acquisition costs (TAC) – essentially a measure of how much Google paid to acquire users – rose 23%, and net profit fell from $17.9 billion to $16.4 billion.
Microsoft, on the other hand, reported positive results across the board for Q3. Revenue was up 18% year-over-year to $49.4 billion, net income rose 8% year-over-year to $6.7 billion, all of its major business segments (office software, cloud, and so on) were up big time.
Battle of the clouds
The most interesting comparison was for Google Cloud and Azure, the two services that can challenge Amazon’s dominance of the cloud market. Both Google Cloud and Azure had a good three months, according to the results.
Microsoft reported cloud revenue rose 32% year-over-year to $23.4 billion in Q3. Azure, which unfortunately doesn’t get its own revenue figure, rose 46% year-over-year.
Meanwhile, Google Cloud reported $5.82 billion in Q1 revenue, up from around $4 billion in the same quarter of 2021. Cloud’s operating loss decreased slightly to $931 million.
The results offer an interesting insight into how Azure and Cloud are seeking to compete with AWS, which recorded $17.8 billion in Q4 revenue.
Perhaps the largest dark spot was for YouTube, which reported $6.87 billion in revenue, well below estimates, as Apple’s privacy changes bite into its ability to target ads.