Google’s cloud remains on a solid course – even if Alphabet earnings missed expectations

Alphabet posted earnings which missed analyst expectations – yet as the company’s ‘other revenues’ bucket continues to grow, the word on Google Cloud remained positive from the executives.

Other revenues, of which Google Cloud is a part – the company continues to not show its full hand – reached $6.42 billion (£5.01bn) for Q319, an increase of 38.5% year on year and a rise of almost 4% from the previous quarter.

Profit for the overall business declined 23%, with the earnings of $10.12 per share falling well below Wall Street expectations of $12.42. However, total revenues of $40.5bn were seen as positive, with advertising revenues up 17% from this time last year.

Google Cloud’s highlights in Q3 were varied and legion. In terms of product and footprint, the company continued its European expansion with a launch in Poland last month, while the release of Dataproc on Kubernetes in the same month solidified Google’s leadership at container management for an enterprise level. On the partnership front, deals were struck in August with VMware, extending the companies’ collaboration, as well as with enterprise blockchain provider Cypherium.

Alphabet CEO Sundar Pichai was keen to evangelise the gains made by Google Cloud, particularly noting ‘customer momentum across multiple areas on [Google Cloud CEO] Thomas [Kurian’s] leadership’ to analysts.

Pichai elaborated on how Google Cloud customers fit in to other emerging areas when fielding an analyst question around quantum computing, an area in which Google declared ‘supremacy’ last month. “This is an important tool in the arsenal,” said Pichai. “While quantum will take many years to really start making a difference, we want to be at the cutting edge of driving it.

“I do think over time for sure, we do see a lot of interest from Cloud customers, particularly in cutting-edge verticals about quantum computing – so that’s an area where I think [we] will participate in as a business,” added Pichai.

Analysts had previously been asking Google to disclose specific figures around its Cloud business. In Q1, Goldman Sachs analyst Heather Bellini posed that very question, only to get a committed non-committal in response. This is understandable; as each of the cloud infrastructure giants count their beans with different methods, specific numbers may be seen as an apples versus oranges comparison. Microsoft continues to give Azure revenues in terms of percentages rather than an exact number, while AWS – which does give specifics – hit almost $9bn in its most recent quarter.

You can read the full Alphabet earnings release here.

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