What You Need to Know about Alphabet’s Cloud Business



$1.0 billion in cloud revenues per quarter

For the first time, we learned more about the size of Alphabet’s (GOOGL) cloud computing business. Alphabet’s cloud computing operations are undertaken by its Google unit, and the cloud is one of Google’s non-advertising businesses reported under Google’s Other Revenues segment. Hardware and app sales are also included in its Other Revenues segment.

While discussing its 4Q17 results with analysts and investors, Google’s CEO, Sundar Pichai, disclosed that the company’s cloud business had reached meaningful scale, with revenues averaging $1.0 billion per quarter.

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Google’s Other revenues growth outpaced company-wide growth

Google’s Other Revenues, which includes cloud sales, totaled $4.7 billion in 4Q17, indicating growth of 38% YoY (year-over-year). This segment grew faster than the overall Google business and the overall Alphabet organization, which grew 24.0% YoY each.

Assuming that Google’s cloud revenues totaled $1.0 billion in 4Q17, the cloud contributed more than 21.0% to Google Other Revenues in the quarter.

Google’s cloud deals

Not only has Google’s cloud business reached what its management describes as meaningful scale, but it has also won large customers and large contracts. Some of the global brands that Google recently won over to its cloud platform include Mattel (MAT), Bed Bath & Beyond (BBBY), and residential real estate firm Keller Williams. Snap (SNAP) and Apple are also among Google’s cloud customers.

Google’s big-ticket cloud computing contracts are worth more than $1.0 million, and they have tripled from 2016 to 2017.


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