Google Cloud revenue surges, still behind AWS and Microsoft

Alphabet said second quarter revenue rose 19 percent to $38.9 billion, driven by gains in sales of mobile ads, YouTube ads and cloud computing services.
Google Cloud at IT trade show

Revenue of the cloud business grew to about $2 billion in Q2 2019, from $1 billion at the end of 2017, Reuters reported.

Google CEO Sundar Pichai yesterday revealed that the technology company’s cloud unit reached $8 billion in annualized revenue and plans to triple its sales force over the next few years.

Google’s cloud is a key growth driver for Alphabet, Sundar Pichai said during second-quarter earnings call.

Google Cloud CEO Thomas Kurian, who has led the business for seven months, chases down Amazon and Microsoft. Kurian promised earlier this year to aggressively increase its sales team.

Amazon Web Services, the leader in cloud infrastructure business, posted 37 percent growth to $8.38 billion. AWS is about quadruple the size of Google’s Cloud business.

Microsoft, the No. 2 player, said last week that Azure grew 64 percent. Jay Vleeschhouwer of Griffin Securities estimated in a note last week that Microsoft picked up $4.1 billion in Azure revenue in its second quarter. That suggests Azure is about double the size of Google’s cloud, CNBC reported.

The latest results brought Alphabet closer to the 20 percent revenue growth it had generated for several years before posting 17 percent growth in the first quarter of 2019, Reuters reported.

Alphabet generates about 85 percent of its revenue from tools used in online advertising or the ad space itself.

Ad licks on Google’s properties rose 6 percent compared to the first quarter, when they had fallen 9 percent. The number of ads shown on websites and apps with which Google partners held steady compared to last quarter.

Alphabet’s quarterly costs at $29.764 billion were about flat with the same period a year ago. Alphabet last year began spending more on hiring for its cloud computing division, acquiring and policing content, developing artificial intelligence capabilities and adding facilities.

Alphabet’s second-quarter operating margin was 24 percent, up from 18 percent in the first quarter.

Alphabet’s net income for the second quarter rose to $9.95 billion from $3.2 billion a year earlier, when it recorded a $5 billion charge related to a fine by European antitrust regulators for abusing its dominance in mobile software.

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