Google's Cloud Surge Anchors Q3 Revenues As Internet Giant Bets Big On Multi-Cloud Plan


Even though Google has been serious about cloud for about three years, it's still "early days" in the market, and Google is on-track with what businesses are looking for -- a multi-cloud strategy, Google CEO Sundar Pichai said during parent company Alphabet's 2018 third-quarter earnings call Thursday.

"It doesn’t look like it's going to be a zero-sum game," he said. "Enterprises don't want to be locked in, and multi-cloud is the direction we are betting on … we are very aligned with where the market is headed."

Google's partners, Pichai said, will help the company capture more enterprise revenue. Google has been ramping up investments in not only direct sales, but its partnership strategies, too, he said.

"When I look at the pipeline ahead, we see there's momentum there as well," he added.

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[Related: Google 'Not Competing With Our Partners' By Building Private Cloud Offering, Company Says]

Google doesn't specifically break out financials for the Google Cloud Platform. However, its "other revenues" category, which includes cloud services and applications, Google Play, and hardware (including Nest), served as a bright spot this quarter. Other Revenues rose to $4.64 billion in the quarter, up 29.2 percent from $3.59 billion in the same year-ago period.

By comparison, Microsoft Azure revenue surged 76 percent during the first quarter of fiscal 2019, which ended Sept. 30. Amazon Web Services revenue jumped 46 percent during its Q3 2018.

Google's cloud division includes the Google Cloud Platform and G-Suite, its portfolio of cloud applications that includes Gmail, Drive, Docs and Calendar - all of which are sold by channel partners today.

Moving forward, Google will be leaning heavily on cloud and its hardware products to ensure its "ongoing, sustained growth," said Ruth Porat, CFO of Alphabet Inc. and Google LLC.

The company's "Other Bets" segment, which includes its healthcare company Verily, internet service provider Fiber, and self-driving car company Waymo, posted Q3 revenue of $146 million, up from $117 million during the same quarter last year.

Parent company Alphabet reported revenue of $33.74 billion for the third quarter of fiscal 2018 which ended September 30, up about 21 percent from the $27,77 billion the company reported for the same year-ago quarter. Alphabet's net income was $9.19 billion, or $13.06 diluted earnings per share (EPS) for the quarter, up from $6.73 billion, or $9.57 EPS, during the same period last year.

Despite the 21 percent bump up, the Internet giant's $33.74 revenues still fell short of Wall Street's expectations of $34.04 billion for the quarter and its stock fell in after-hours trading by about 5 percent.

Google’s advertising business, once again, accounted for most of its revenue, bringing in $28.95 billion in the third quarter. Sales from the Pixel 3 smartphone and the Google Home Hub that were launched earlier this month were not included in Q3 earnings, but analysts expect these products will impact Q4 financials.

"Our hardware efforts are picking up real momentum," Pichai said of the company's latest products.

Shortly before the earnings call on Thursday, Pichai sent an email to employees Thursday in response to a New York Times report about sexual misconduct and several Google executives who had allegedly been shielded by the company. Pichai told employees that 48 staff members have been terminated for sexual misconduct over the last two years.