Googlebusters: Cloud biz jumps 45% in Q3 but misses Wall St consensus, operating losses almost halved

Advertising engine still revving amid pandemic

Google Cloud – a relative blip on parent Alphabet's balance sheet – booked in a 45 per cent year-on-year bounce in turnover for calendar Q3 but still missed the consensus estimate by Wall Street analysts.

For the quarter ended 30 September [PDF], the division reported turnover of $4.99bn, falling short of forecasts by $200m, and rising 7.8 per cent on the prior three-month period, which marked a slowdown in sales momentum.

AI and data warehousing services on Google's cloud are convincing customers to sign off purchase orders, said Alphabet CEO Sundar Pichai, describing it as a "source of strength." He added that Google is "sharpening our solutions by verticals." These include retail, healthcare, financial services, and entertainment and media.

"Big Query, our leading data warehouse solution, is reducing costs and driving productivity at Cardinal Health and ATB Financial. Our differentiated AI in mall-based industry solutions are helping leading global companies. GE Appliances… is integrating Vision AI into their next-generation smart home appliances. And Ikea is using recommendation AI to drive a 30 per cent increase in customer click-through rate," said Pichai.

Operating losses went in the right direction, falling from $1.208bn a year ago to $644m, meaning that Google might break even in the not-too-distant future, should the same dynamics continue.

CFO Ruth Porat said Google Cloud Platform's (IaaS) sales expansion was again faster than the average for Google Cloud "reflecting significant growth in both infrastructure and platform services."

The EMEA subsidiary of Google Cloud has seen quite a number of changes at the top this year, with former President Chris Ciauri leaving the business in early summer, replaced by ex-SAP exec Adaire Fox-Martin, and more recently UK lead Pip White heading back to Salesforce, this time as EMEA boss of Slack.

Porat said last night: "We remain focused on revenue growth and are pleased with the trends we're seeing. Across cloud, we continue to invest aggressively, both in growing our go-to-market and product teams, as well as building out our cloud regions."

According to the last set of Q2 market IaaS estimates by Canalys, Google still lagged behind Microsoft and Amazon by some measure, and judging by Microsoft's numbers last night, that differential still exists.

As for the results of the overall corporate machine that is Google, revenue grew 41 per cent to $65.11bn, and operating income jumped 88 per cent to $21.03bn. Google Advertising accounted for $53.13bn of the overall top line, with an operating income of $29.973bn. The rest is comparative chicken feed. Other bets brought in $182m in sales and reported an operating loss of $1.288bn. Corporate costs, unallocated, accounted for a $1.10bn operating loss too. ®

Similar topics


Send us news

Other stories you might like