Can Google Cloud Hit $9 Billion In Q4? 5 Google Earnings Keys To Watch

From Google layoffs and AI to Google Cloud’s revenue prediction, here are five things partners and investors need to watch for during Google’s Q4 2023 earnings report on Tuesday.

Google Cloud’s parent company Google is set to report the financial earnings result of its fourth quarter 2023 on Jan. 30.

Will Google discuss the broad layoffs at the company that have impacted over 1,000 employees this month?

Can Google Cloud surpass the $9 billion quarterly revenue threshold and remain a profitable company?

Did the cloud company’s artificial intelligence push in 2023, specifically in generative AI, pay off in tangible revenue growth during the fourth quarter?

Will Google Cloud grow sales at a faster pace than Microsoft Azure and Amazon Web Services?

CRN breaks down these questions and more as we take a look at five key things partners, investors and customers should watch for ahead of Google’s fourth quarter financial earnings report on Tuesday at 4:30 pm ET.

No. 1: Will Google Cloud Surpass $9 Billion? Zacks Things So

Google Cloud is the third largest cloud computing provider in the world, owning approximately 11 percent share of the global cloud services market as of third quarter 2023. The Mountain View, Calif.-based cloud giant has been increasing sales at such a high rate that it seems possible that Google Cloud generated a record $9 billion during Q4 2023.

Zacks Consensus Estimate predicts that Google Cloud will report total earnings of $9.04 billion for its fourth quarter 2023. This would represent a year-over-year growth rate of over 23 percent.

This 23 percent growth rate is on par with Google Cloud’s financial results from previous quarters in 2023. In third quarter 2023, for example, Google Cloud grew sales 22 percent year over year by capturing $8.4 billion in sales.

The Takeaway: If Zacks Consensus is correct, Google Cloud can in fact surpass the $9 billion revenue threshold. A 23 percent year-over-year sales growth rate would be a accomplishment for Google Cloud as the cloud giant would be on a whopping $36 billion run rate.

Click through to read the four other Google Cloud keys to watch for during Google’s Q4 2023 earnings.

No. 2: Will Layoffs Discussion Be Top Of Mind?

This month, Google Cloud’s parent company Google laid off over a thousand employees from different business units.

Google cut a few hundred employees in each division inside its Google Assistant software business. The company also confirmed laying off hundreds inside its Devices and Services business unit, which mostly impacted its augmented reality (AR) division as well as Google’s Nest, Fitbit and Pixel hardware groups. The company also recently let go of about 100 employees from YouTube.

However, it is key to know that Google CEO Sundar Pichai told employees that layoffs in 2024 won’t be as significant as 2023. In January 2023, Google unveiled it would be laying off 12,000 employees.

“We have ambitious goals and will be investing in our big priorities this year,” Pichai wrote in an internal memo to Google employees. “The reality is that to create the capacity for this investment, we have to make tough choices. … These role eliminations are not at the scale of last year’s reductions and will not touch every team.”

The Takeaway: Google has declined to comment to CRN on whether layoffs have specifically impacted Google Cloud. It will be key to see if Google executives on Tuesday’s earnings call will talk about the recent layoffs and if unveil any information on whether Google Cloud’s employee headcount is being impacted.

No. 3: Can Google Cloud Continue Profitability?

For years, Google Cloud was in the red. The company was not profitable due to investing billions each quarter on R&D, innovation and expanding its global reach with new data centers and cloud regions in order to better compete with AWS and Microsoft.

However, that all changed in 2023.

In Q1 2023, Google Cloud reported a profit for the first time in its history by generating $191 million in operating income. The company has reported profitability in each of the three quarters thus far in 2023, including record operating income of $395 million in Q2 2023 compared to a operating loss of $590 million in Q2 2022.

The Takeaway: If Zacks Consensus Estimate that Google Cloud generated $9 billion in Q4 2023 comes true, it is highly likely the company will report profitability in the quarter. If Q4 resulted in a profit, Google Cloud’s profitability year of 2023 could become the norm for the company.

No. 4: Did Google Cloud’s AI Push Generate Sales?

One of the biggest questions in the IT and channel partner world today is just how much actual revenue AI is generating.

After an entire year of investing millions into launching new AI and generative AI products, it will be interesting to see if Google breaks down AI revenue captured in Q4 2023.

Over the past 12 months, Google has launched its flagship Vertex AI platform to allow business to customize and embed foundation AI models inside their applications. Other significant AI product launches include its new conversational GenAI chatbot service Bard, as well as Google Cloud’s new PaLM API that builds apps with a customers own data or on top of external data sources. The company has injected new AI capabilities and GenAI features into its most popular products in 2023 such as BigQuery, Workspace and the Google Cloud Platform (GCP).

The Takeaway: Although it’s hard to breakout official AI sales numbers since the technology has mostly been injected into already mature products—such as GCP and Workspace—it is possible for Google to estimates how much sales impact AI had in Q4.

People tuning in to Google’s Q4 2023 earnings report should expect to hear executives tout new AI customer wins and AI product launches, but it will be far more interesting to see if Google puts any tangible sales numbers on just how much AI has boosted revenue.

No. 5: How Will Google Cloud Stack Up Against Microsoft And AWS?

The three largest cloud computing companies on the planet are all set to release quarter financial results this week.

Google’s second quarter 2023 and Microsoft’s second fiscal quarter 2024 earnings results will be reported on Jan. 30, while Amazon’s AWS results for Q2 2023 will be unveiled two days later on Feb. 1.

CRN has done cross comparisons of each three cloud giant’s financial results for the same quarter. Over the past several quarters, Google Cloud has grown sales at a faster rate than its larger cloud competitors AWS and Microsoft.

For example, in the most recent Q3 2023 year-over-year sales growth results, Google Cloud increased sales by 22 percent, followed by Microsoft at 19 percent and AWS at 12 percent. AWS and Microsoft both generate more total cloud revenue each quarter.

Looking at Google Cloud’s Q4 2022 results, the company increased sales 32 percent compared to Q4 2021 to $7.3 billion.

The Takeaway: If Google Cloud ever wants to climb the global cloud market share ladder, it needs to continuously generated higher year over year growth rates that AWS and Microsoft. It will bode well for Google Cloud this year if Q4 2023 results show higher cloud growth rates than its two rivals.