Google Cloud, Google Sales, Made For Strong Alphabet Q1

Strong ad sales and growth of its cloud business drove a big increase in first fiscal quarter 2017 sales and profits for Alphabet, the parent company of Google.

The biggest part of that growth came from revenue from Google properties, which were much higher and had a higher growth rate than revenue from Google Network Members’ properties, the company said Thursday during its first fiscal quarter 2017 financial analyst call.

Revenue from Google properties reached $17.4 billion, up 21.5 percent over last year. That far exceeded Google Network Members’ properties revenue of $4.0 billion, which rose 8.6 percent over last year.

Alphabet reported revenue for its first fiscal quarter 2017, which ended March 31, of $24.8 billion, up about 24 percent from the $20.3 billion the company reported for the first fiscal quarter 2016. The U.S. market counted for $11.8 billion of the total revenue, with that revenue up 25 percent over last year.

[Related: Google CEO: Cloud Had A Breakout Year In 2016]

GAAP income from the quarter was reported at $5.4 billion, or $7.85 per share, up from the $4.2 billion, or $6.12 per share, the company reported for the same period of last year. Analysts had been expecting about $24.2 billion in revenue and earnings of $7.40 per share.

Google CEO Sundar Pichai (pictured) said on the call with financial analysts that Google is increasingly being asked to partner for mission-critical projects and full migrations, including moving data from on-premise data centers to the cloud.

Pichai, in response to an analyst’s question about Google’s channel strategy, replied that Alphabet’s cloud business enjoyed the highest growth in headcount and capital expense of all Alphabet’s businesses, and that it is now providing the kind of “heavy lifting” needed to help meet enterprise IT requirements.

The arrival of Diane Greene, senior vice president of Google Cloud, has helped build world-class sales, marketing and engineering teams, Pichai said.

“The heavy lifting, I would say, is around how we meet enterprises in the market,” he said. “We reorganized so we have one face to the customer,” he said. “So it’s not just sales reps. We’ve been thoughtful about how we build out the entire go-to-market organization.”

The company’s approach to the market is to be one Google, Pichai said. “When a customer signs up for Google Cloud, they get more than just GCP [Google Cloud Platform] and G Suite,” he said. “They have access to the ads and the analytics teams, YouTube teams, and resources in our organization.”

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