Google breaking out cloud operating income, expenses

Alphabet CEO Sundar Pichai gestures during a session at the World Economic Forum (WEF) annual meeting in Davos, on January 22, 2020.(Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)Google wants investors to know its cloud business isn’t going anywhere.During its third quarter earnings call Thursday, the company — which doesn’t provide revenue guidance — said it will start reporting operating income (or losses) for its cloud business, joining Amazon in giving investors more details. The company began reporting cloud revenue for the first time earlier this year.Google Cloud brought in $3.44 billion in revenue versus the $3.32 billion analysts expected, according to its Q3 results. That’s up 45% from $2.38 billion the same period a year ago, which is faster growth than Amazon Web Services (up 29%) although slightly slower than Microsoft Azure (up 48%).The efforts come as the company tries to convince investors it still sees itself as a serious player despite its distant third-place position. In 2019, Amazon held 45% of the cloud infrastructure market, while Microsoft had about 18% and Google had about 5%, according to research company Gartner.”The point that both Sundar and I have underscored is that we are investing aggressively in cloud given the opportunity we see and, frankly — the fact that we were later than peers — we’re very encouraged by the pace of customer wins and very strong revenue growth of GCP and workspace that we do intend to maintain a high level of investment,” CFO Ruth Porat said in an earnings call Thursday. “We do believe we’re still early in this journey.”More specifically, Google wants to show how much it’s investing in its cloud business.”With the segmentation, you will additionally see information about the scale of our investment, which will help gauge the progress we are making on the multi-year path ahead to create sustainable value,” said CEO Sundar Pichai.Showing the scale of those investments could help Google compare favorably against smaller cloud players like IBM and Oracle, whose capital expenditures are much lower than the bigger cloud competitors.Heather Bellini from Goldman Sachs asked Pichai how he thinks Google Cloud CEO Thomas Kurian is doing, given he’s been at the helm for nearly two years now.”I can see it ramping and I can see the results coming into play,” Pichai responded. “Scaling our go-to-market, our people and our partners—I think that’s been key. I think the pricing based on value — that deeper play is something I’m excited about.” Pichai also touted the company’s ability to roll in its infamous artificial intelligence technology.Execs also touted its growing consumer services such Gmail and Google Drive, whose success the company has for years sought to replicate inside companies, schools and nonprofits. The company recently tried rebranding its consumer products in attempts to gain more traction.WATCH NOW: Alphabet soars on Q3 earnings

Show More

Related Articles