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Google chief suggests post-coronavirus cloud boost

Google’s GCP platform has seen increased demand during the Covid-19 coronavirus pandemic, and the company’s CEO believes economic recovery may lead to fewer on-premise datacentres

Google has posted first-quarter 2020 revenue of $41.2 bn, up 13% year-on-year (YoY) and up, driven by Search, YouTube and its Cloud businesses.

Ruth Porat, chief financial officer of Alphabet and Google, said: “Our business, led by Search, YouTube, and Cloud, drove Alphabet revenues to $41.2bn, up 13% versus last year, or 15% on a constant currency basis.”

While the company grew revenue, it experienced a sharp decline in advertising revenue during March.

“Performance was strong during the first two months of the quarter, but in March we experienced a significant slowdown in ad revenues. We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities,” Porat added.

In a transcript of the earnings call, posted on the Seeking Alpha financial blogging site, Porat described how Google’s cloud business was being bolstered during the pandemic, saying it has resulted in increased demand for  Google Cloud services.

“We’re proud of the accelerated traction we have achieved across sectors, including public sector and healthcare for disease monitoring and control, working with leading retailers on demand forecasting, working with companies across media and communications to enhance their customer service, and across industries on supply chain optimisation.” 

Discussing Google’s cloud business during the Covid-19 crisis, she said: “Even through March, our non-advertising revenue lines maintained their strong performance, particularly Google Cloud.”

Google Cloud, including the Google Cloud Platform (GCP) and G Suite, grew revenue by 52% to $2.8bn for the first quarter. Porat said this was driven by “significant growth” of GCP and ongoing strong growth at G Suite.

“Once again, the growth rate of GCP was meaningfully higher than that of cloud overall. GCP growth was led by our infrastructure offerings in our data and analytics platform. We’re pleased with the ongoing growth in G Suite, which continues to reflect growth in both seat count and average revenue per seat,” she said. 

Porat said Google had made significant headcount increases in technical and sales roles for Google Cloud. “We remain very pleased with the execution by the team, reflected in the ongoing pace of customer adoption of both GCP industry-specific solutions and G Suite collaboration tools to help businesses operate efficiently and effectively,” she added.

In his statement covering the quarterly earnings, Alphabet and Google CEO, Sundar Pichai, said: “Given the depth of the challenges so many are facing, it’s a huge privilege to be able to help at this time. People are relying on Google’s services more than ever and we’ve marshalled our resources and product development in this urgent moment.”

During the earnings call, Pichai was asked about how coronavirus could affect Google’s customers. Responding to the question, he suggested that businesses may consider reassessing the need for on-premise datacentres, as they look to reduce fixed costs in a bid to recover financially from the coronavirus lockdown.

“Every company has been thinking about digital transformation, but they are asking the questions deeper. For example, if you have datacentres, there are fixed costs through something like this. And you learn going through moments like that, and you’re thinking about the opportunity harder.”

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