Google Cloud Platform is carving out a niche among enterprise customers, finding strength in areas such as open source support and machine learning as it goes up against much bigger competitors, Google CEO Sundar Pichai said on a quarterly earnings call Monday.
Google (Nasdaq: GOOG) is the fourth-largest cloud provider; it lags behind Amazon, Microsoft and IBM, according to a recent report from Jefferies & Company Inc. Amazon, in fact, is so far in the lead it has more cloud-based revenue than the next four competitors combined, including Google. (See Google & Alibaba Cloud Gaining Fast in Public Cloud – but AWS Still Rules.)
But Google is growing fast, Pichai said in a quarterly earnings call for parent company Alphabet Inc. Monday afternoon.
Google doesn't break out cloud revenue from other revenue, but Pichai noted Monday that cloud revenue exceeded $1 billion per quarter last year, with momentum increasing and revenue growth accelerating in the first quarter. The company is signing bigger customers.
What's drawing in enterprise customers to Google Cloud ? Security and analytics, Pichai said. Customers are also drawn by machine learning, support for open source standards, particularly Kubernetes. And Alphabet sees synergies between G Suite and Google Cloud Platform, he said.
Alphabet reported revenues of $31.1 billion, up 26% year-over-year for the first quarter 2018 quarter ending March 31, and beating analyst expectations of $30.36 billion. Operating income was $7 billion, with diluted earnings per share of $9.93 adjusted, compared with $9.28 expectations.
In the category of "other revenues," which includes Google Cloud Platform, Alphabet saw revenues of $4.35 billion, up a hefty 36% year-over-year, the company said. "Other revenues" also include Google's hardware, as well as the Play Store. As of this quarter, "other revenues" includes Nest hardware, previously included in a category Alphabet calls "other bets."
Revenue increased 14% to $150 million in the "other bets" category, which including Google Fiber and the life sciences brand, Verily. Losses there narrowed, to $571 million from $703 million in the year-ago quarter.
Google continues to be the main engine driving Alphabet's business, pulling in $22 billion, up from $17.4 billion year-over-year. And ads still dwarfed other revenue sources, with ads pulling in $26.6 billion, up 24% year-over-year.
Alphabet stock traded at $1,073, down less than 1% in after hours trading.
Alphabet's complete earnings press release is here.
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— Mitch Wagner Executive Editor, Light Reading