Google earnings: Google Cloud’s growth slows but still a bright spot

  • Alphabet reported earnings on Thursday, disclosing that Google Cloud generated over $3 billion in revenue — up 43% from the same period of last year.
  • Last quarter, Google Cloud saw a 52% year-over-year increase, showing that revenue growth in the unit is slowing down.
  • On a call with investors, Google CFO Ruth Porat attributed the slowdown to price changes at G Suite, its productivity software suite. 
  • Google Cloud was still a bright spot on Alphabet’s earnings report, which saw Google report its first quarterly revenue decline since going public.
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Google Cloud’s revenue growth is showing signs of slowing down, but Google is still investing aggressively in the unit by spending big on hiring and building new data centers.

On Thursday, Alphabet announced that Google Cloud generated over $3 billion in revenue this past quarter. That’s a 43% increase from the $2.1 billion it posted over the same period last year. Still, that rate of growth is down from the previous quarter, when Google Cloud saw a 52% revenue increase, year-over-year.

Ultimately, Google Cloud was one of the bright spots for Alphabet on this earnings report. While its earnings report slightly beat Wall Street expectations overall, Google saw its first quarterly revenue decline since going public, as Alphabet reported overall revenue of $31.6 billion — down from $31.7 billion over the same period last year. 

Google Cloud is still putting a big focus on hiring and building new data centers. Since Google Cloud CEO Thomas Kurian joined early last year, the company has gone on a leadership hiring spree, winning over talent from enterprise stalwarts like Oracle and SAP. 

It also saw strength in selling its infrastructure and data and analytics offerings, the company said on Thursday. Earlier this month, Google Cloud announced a new product that allows customers to run its flagship data warehouse product BigQuery on multiple clouds, even those of rivals like Amazon Web Services and Microsoft.

“GCP maintained a strong level of revenue growth it delivered in the first quarter and its revenue growth was again meaningfully above cloud overall,” Google CFO Ruth Porat said on the earnings call with investors.

Porat attributed the lower Google Cloud revenue growth compared to last quarter to G Suite, its productivity software, and specifically a “lapsed” price increase that went into effect last April and that is now accounted for as part of its normal revenue. Still, she says, G Suite maintained “healthy growth,” especially amid the ongoing remote work boom. 

“G Suite products and in particular Google Meet have been absolutely critical,” Alphabet CEO Sundar Pichai said on the earnings call. “We quickly re-engineered it and made it available widely to help millions of businesses and other organizations connect and collaborate.”

Read more: Google Cloud did some ‘myth busting’ about data privacy and winning large customers this week as it tries to win the war against Amazon and Microsoft, analysts say

Currently, Google Cloud still trails behind cloud rivals AWS and Microsoft. However, it has been working on building itself to become stronger in attracting enterprise customers by investing in data privacy and security, and it even announced some new customers this past quarter like Goldman Sachs, Deutsche Bank, Verizon, Fox Sports, and the French auto company Renault.

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