Weaknesses in the British pound slowed EMEA growth for tech giant Google in the second quarter.
Group revenues for the firm’s parent company Alphabet grew by 21 percent year over year for the three months ending 30 June to $26.01 billion, or 23 percent in constant currencies.
Operating income meanwhile fell by 30.8 percent to $4.12 billion, largely due to Google incurring a record €2.42 billion fine from the European Commission for allegedly breaching antitrust rules to push its own shopping comparison service. As a consequence, operating margins fell from 28 percent posted in the Q2 of 2016, to 16 per cent this year.
Excluding the EU fine, operating incomes from Google came in at $7.8 billion, up from $6.99 billion reported in the same quarter last year. Alphabet’s “other bets” segment – which includes emerging technologies such as smart homes, Google’s venture capital arm and self-driving car technology – dragged group operating income down after posting a $772 million loss.
Speaking to analysts on an earnings call, Alphabet’s CFO Ruth Porat claimed that while all geographical regions grew on an annual basis, EMEA’s growth was slowed down by weaknesses in the British pound and the euro.
EMEA revenues hit $8.5 billion, up 14 percent annually, while the US saw 23 percent growth to $12.3 billion. APAC hit $3.7 billion, up 28 percent year over year while the America’s – which include Canada and Latin America, reached $1.4 billion, up 31 percent annually.
Google also lauded its progress within its cloud business, which is lumped in with its hardware and Android app sales under “other revenues”. This segment grew 42.3 percent annually to $3.09 billion.
The US giant also increased its headcount by 9,031 employees to 75,606 staff compared with the end of Q2 2016, with CEO Sundar Pichai claiming that the firm has driven up recruitment in its cloud business.
“In terms of product areas the most sizable headcount additions were once again made in cloud for both technical and sales roles consistent with the priority we place on this business,” he said on the same earnings call.
“Google Cloud Platform (GCP) continues to experience impressive growth across products, sectors and geographies and increasingly with large enterprise customers in regulated sectors. To be more specific about our momentum with big customers, in Q2 the number of new deals we closed worth more than $0.5 million is three times what it was last year.”
He added: “We also continue to build out our partnerships, in Q2 we announced an expansion of our partnership at SAP and a new partnership with Nutanix to integrate their products with GCP. So customers can run workloads in hybrid environments, on-prem and in the cloud.”
