Google’s cloudy head count and revenues remain on the up – but specifics are still a while off

Google is still not quite ready to divulge specifics around its cloud – yet the numbers continue to rise, whether it is from revenues or employees.

Alphabet’s Q1 earnings, published yesterday, saw total revenues of $36.3 billion (£27.8bn) for the most recent three months, an uptick of 16% on the previous year. Google’s other revenues, of which Google Cloud forms a part, shifted up 25% to $5.4bn (£4.19bn).

Naturally, the biggest dent in Alphabet’s figures was the €1.49bn (£1.28bn) fine incurred by the European Commission in March for breaching online advertising antitrust rules. Including the fine, this meant operating income for the quarter fell to $6.6bn from $8.3bn. More importantly for investors, it ensured that earnings per share (EPS) fell from $11.90 to $9.50 – well below Wall Street’s expectations of $10.58.

Looking at the cloud side, CFO Ruth Porat told analysts that the biggest increase was in R&D expenses ‘with headcount growth in cloud as the largest driver’. “In terms of product areas, the most sizeable headcount increases were in cloud for both technical and sales roles,” Porat added.

Naturally, this is the first quarter where CEO Thomas Kurian had his feet under the table. At Next in San Francisco earlier this month, a variety of announcements were made, from cloud services platform Anthos, to an open source partner jamboree featuring Confluent, MongoDB, Redis Labs, and more.

“Thomas [Kurian] has really hit the ground running,” Google CEO Sundar Pichai told analysts. “I was excited to announce Anthos, which gives customers a very elegant solution to both hybrid cloud and multi-cloud in a single technology stack. We are also deeply committed to becoming the most customer-centric cloud provider for enterprise customers and making it easier for companies to do business with us.”

Many of the same stats from Next were referenced here again – nine in 10 of the biggest media companies, seven of the 10 largest retailers, and more than half of the 10 largest companies in manufacturing and financial services are using Google’s cloud.

Yet what about the specifics? Amazon Web Services (AWS) disclosed revenues of $7.4bn in its most recent filings. Why couldn’t Google offer something similar?

Heather Bellini, analyst at Goldman Sachs, had the opportunity to directly ask the top brass the question much of the media had been fascinated in for some time. Despite the momentum, Bellini asked, when will Google be able to share similar updates and growth rates to their biggest competitors?

“[At] the high level, the key differentiators which we are focused on and which we hear from customers are security and reliability, being really open about hybrid multi-cloud – customers don’t want to be locked into any one cloud provider,” said Pichai. “I think we are building a strong business across all our verticals, and we are definitely seeing a strong momentum, and look forward to being able to share more at the appropriate time.”

This committed non-committal was of course to be expected, but interestingly chimed in with similar material analysts had previously told this publication. Speaking to CloudTech on the occasion of Google’s Q418 results, in February, Paul Miller, senior analyst at Forrester Research, explained there was a wider picture to look at.

“All of the major players carve their portfolio up in different ways, and all of them have different strengths and weaknesses,” Miller said at the time. “Make it too easy to pick out G Suite’s revenue and it would look small in comparison to Microsoft’s Office revenue. Make it too easy to pick out GCP, and it would look small in comparison to AWS.

“Neither of those are really apples-to-apples comparisons,” Miller added. “The real value for Google – and for most of the others – is in the way that these different components can be assembled and reassembled to deliver value to their customers. That should be the story, not whether their revenue in a specific category is growing 2x, 3x, or 10x.”

It is an epithet with which Google appears to heartily agree.

You can read the full financial report here.

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