Google Cloud pumps profits into parent company Alphabet's bottom line

Google cloud Platform continued to post growth in each of its regions during the third quarter, and saw increased interest in its analytics tools.

While parent company Alphabet delivered a mixed bag of results during Monday's earnings report, Google CEO Sundar Pichai was effusive in his praise for Google Cloud Platform CEO Thomas Kurian and his team.

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After leaving Oracle late last year, Kurian took over as Google Cloud Platform's CEO in February of this year.

"The momentum has been great," Pichai said on the earnings call, according to a Seeking Alpha transcript. "Obviously, ever since Thomas has come in, he has continued to invest across the board.He’s definitely focused a lot on scaling up our sales partner and operational teams, and it's playing out well.

"In this business, it's important for you to be in as many deal situations as possible and get those wins, which accrues over time. And so, we are definitely seeing the momentum."

That third quarter momentum included the announcements of new cloud regions in Nevada and Poland. When the Nevada cloud region opens next year, it will be Google Cloud Projects' seventh in the U.S., while the Poland region will be the seventh in Europe.

Google Cloud Project (GCP) falls into the company's "other" revenue bucket, which also includes Google Play and hardware. Of those three, GCP had the biggest revenue. Other revenue was $6.43 billion in the third quarter, which was a 39% increase over $4.64 billion a year ago.

"Within cloud, growth in GCP was once again the primary driver of performance with strong customer demand for our compute and data analytics products, complemented by ongoing growth in G Suite, reflecting both new pricing and seat growth," Alphabet and Google CFO Ruth Porat said.

Porat said GCP had substantial growth from data analytics as customers are seeing the benefits from implementing BigQuery. BigQuery is a Google Developers tool that allows customers to run fast queries of large datasets.

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Despite its third-quarter strides, GCP still significantly trails Amazon Web Services (AWS) and Microsoft Azure across the various clouds. Last Thursday, Amazon reported that its cloud division revenue increased 35% in the third quarter, which was down from 37% in the previous quarter, and its lowest growth rate in five years. AWS finished the third-quarter with $9 billion in revenue, which was a bit short of analysts polled by FactSet that had projected $9.1 billion

On Wednesday, Microsoft said in its earnings call that Microsoft Azure's revenue growth rate had grown by 59%, but that was down from the 64% posted in the prior quarter and a decline from the growth rate of 76% a year ago. While Microsoft doesn't break out specific revenue amounts for Azure like Amazon does with AWS, Microsoft said its "Intelligent Cloud" business revenue increased 27% to $10.8 billion, with revenue from server products and cloud services increasing 30%.

Other than saying GCP accounted for a large chunk of the $6.4 billion third quarter revenue, Alphabet didn't break out more specific numbers for cloud.

According to Synergy Research Group, Amazon has a 33.5% share while Microsoft has around 16.5% after  prior to Google's third quarter earnings report.

In an effort to close the gap on AWS and Microsoft, Google Cloud has hired more sales, engineering and product managers, according to Porat. Porat also said that GCP, analytics and compute would continue to be a focus of the company's investments going forward.