Google Cloud’s profit comes with accounting caveats

Google Cloud reported US$191 million in first-quarter operating profit on 25 April, against a recast $706 million loss a year earlier. Revenue reached $7.45 billion, up 28%.

Photo: Anthony Quintano, “Google at the 2012 Democratic National Convention North Carolina”. Taken 6 September 2012. CC BY 2.0. Resized and cropped. Historical Google display; no endorsement implied.

Alphabet’s results and accounting notes qualify that turnaround. Longer estimated equipment lifetimes reduced group depreciation by $988 million. The release doesn’t isolate Cloud’s share, so subtracting the whole benefit from its profit would be wrong.

Separately, $2.5 billion of workforce and office-space charges sit in unallocated corporate costs, outside the reported segments. Prior-year segment figures are recast for revised cost allocations and DeepMind’s move to corporate costs.

Cloud’s reported profit therefore isn’t a measure of its earnings after all Alphabet-wide costs. The record supports the reported turnaround, but not a Cloud profit calculation under unchanged accounting assumptions.