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Alphabet CEO Sundar Pichai has confirmed its Google Cloud arm is officially a $10bn revenue run rate business, ending years of speculation about how big a contribution the subsidiary makes to the firm’s overall operations.
Google’s parent company used the publication of its fourth-quarter financial results to provide the market with separate breakdown of how its cloud business is performing for the first time, having previously lumped it in with the monies generated by its hardware business and Play application marketplace.
Its newly expanded figures revealed that Google Cloud made a quarterly revenue of $2.6bn in the last three months of 2019, which is up 53% on the same quarter a year ago when it made $1.7bn.
From a full-year perspective, Google Cloud generated $8.9bn in revenue during 2019, compared with $5.8bn in the 12 months to 31 December 2018.
In that time, the cloud division has undergone a change in senior leadership, following the appointment of ex-Oracle product development president Thomas Kurian as its CEO in early 2019, and doubled-down on its efforts to win over enterprises.
The company’s off-premise proposition is made up of the Google Cloud Platform (GCP) suite of infrastructure services, such as compute and storage, but also the company’s flagship software-as-a-service business productivity offering, G Suite.
In a statement announcing the results, Pichai confirmed the subsidiary’s financial performance means Google Cloud is now a bona fide $10bn revenue run rate business, with – according to Synergy Research Group’s data – an 8% share of the overall public cloud market.
Ruth Porat, Alphabet
During a conference call with analysts, Pichai attributed the subsidiary’s 53% year-on-year revenue growth to the “significant” uptick in demand the firm has seen for GCP services in that period, which was “meaningfully higher” than the growth achieved by its overall cloud business.
In that time, Pichai revealed the number of cloud deals the firm has secured over the past 12 months that exceed $50m has more than doubled, on the back of the investments the company has also made to bolster its go-to-market strategy, under Kurian’s leadership.
“Under Thomas’s leadership, I think we have clearly focused on six industry verticals across 21 markets and doubling down on those efforts, bringing in a lot of new products and compliance certification, so effectively expanding the [total addressable market] we serve,” he added.
The company also reported a “strong uptake” of its multicloud management offering, Anthos, which was the flagship announcement made at its Google Cloud Next conference in spring last year.
“We’re pleased with the growth trajectory of GCP, which we see in customer momentum, the growing size of the average contract, and – of course – revenues,” said Alphabet chief financial officer Ruth Porat during the conference call, transcribed by Seeking Alpha.
“Given our position as a challenger, we’re investing aggressively, focused on building out our go-to-market capabilities, executing against our product roadmap and extending the global footprint of our global infrastructure focused on 21 markets and six industries.”
Porat provided the market with a steer in what the future holds for the firm’s datacentre investment priorities, which she said the firm “anticipates” will focus more on server spend than on the construction of new facilities, as part of its efforts to boost the efficiency of its supply chains.
Read more about public cloud trends
- Synergy Research Group’s fourth-quarter look at the cloud infrastructure market reveals a huge jump in sequential spend since the third quarter.
- Amazon Web Services (AWS) has played down the competitive threat to its lead in the public cloud market, as its fourth-quarter results confirmed that the company is now a $40bn revenue run rate business.
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