Google Cloud has posted $3.44 billion (£2.62bn) in its third quarter revenues at a growth of 44% year over year – but future earnings releases will see more detail as the company looks to convince investors and prospects of its progress.
Total revenues for Alphabet were $46.17bn for the most recent quarter, up 14% from this time last year, with Google Cloud comprising 7.5% of all revenue generated. Google Cloud revenues were up 14% on the previous quarter, having broken the $3bn mark for the first time in July.
Speaking to analysts after the release, CEO Sundar Pichai noted three trends which were driving the momentum of Google’s cloud business. These included providing ‘a foundation for data processing and analytics’ as the shift to digital accelerated, lowering IT costs, and thirdly, ‘creating a more collaborative world.’
Of more intrigue, however, was the disclosure that, beginning from the fourth quarter of 2020, Alphabet would break out its Google Cloud figures as a separate reporting segment. This would include information about the scale of Google’s investments, as well as ‘helping gauge the progress we are making on the multi-year path ahead to create sustainable value.’
“We are making an opportunity for Google Cloud in this growing global market,” said Pichai. “We continue to invest aggressively to build our go-to-market capabilities, execute against our product roadmap and extend the global footprint of our infrastructure.”
Highlights for Google Cloud in the most recent quarter included a customer win with Nokia, with the network giant migrating its on-premise infrastructure to Google – Pichai noted this example as part of lowering IT costs. The company was also named as the best cloud provider for retail by Canalys in September, while this week saw more information gleaned on a large retail customer in IKEA.
Yet despite its aggressive approach and the frequency of news and updates released, Google Cloud continues to sit in third place in the cloud infrastructure market, making negligible – if any – gains on its rivals.
Amazon Web Services (AWS), by comparison, posted revenues of $11.6bn for its most recent quarter, the largest in the company’s history. Microsoft Azure’s specific revenue is not disclosed, but it is safe to say the exact figure is somewhere in between Google Cloud and AWS. One analyst, Brent Bracelin of Piper Sandler, posited that Azure is now larger than the Windows business for the first time.
The effects of the Covid-19 pandemic have seen an uptick for virtually all cloud providers, with the market numbers barely changing. Yet Google wants to show that while the pond may be still and calm, the company is paddling furiously underneath, as CFO Ruth Porat explained.
“The point that both Sundar and I have underscored is that we are investing aggressively in cloud given the opportunity that we see,” said Porat. “Frankly, the fact that we were later relative to peers, we’re very encouraged by the pace of customer wins, and the very strong revenue growth in both GCP [Google Cloud Platform] and Workspace.
“But we do intend to maintain a high level of investment to best position ourselves,” Porat added. “We describe this as a multi-year path because we do believe we’re still early in this journey.”
You can read the full Alphabet earnings report here.
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