Google Cloud sees uptick in deals greater than $100M

During Alphabet’s fourth quarter 2018 earnings call yesterday, the company reported that Google continued to grow its “other revenues” segment, which includes its Google Cloud Platform (GCP). The segment also includes the company’s hardware sales, so it’s difficult to gauge just how much GCP is growing compared to its public cloud competitors such as Amazon Web Services (AWS) and Microsoft Azure.

For the fourth quarter of 2018, the “other revenues” division accounted for $6.49 billion, a 31% increase year over year.

Alphabet CEO Sundar Pichai said that during 2018 the company more than doubled both the number of GCP deals over $1 million as well as the number of multiyear contracts signed. “We also ended the year with another milestone passing 5 million paying customers for our Cloud collaboration and productivity solution G Suite," said Pichai.

Alphabet CFO Ruth Porat said GCP remains “one of the fastest-growing businesses across Alphabet.” She said GCP has seen a nice uptick of deals that are greater than $100 million.

During the fourth quarter of 2018, the company launched its 18th Google Cloud region; it opened a new office in Berlin; and it announced that it’s building a new data center in Denmark. It also opened a new office in Detroit and announced that it will invest over $1 billion in capital improvements to establish a new campus in New York City, which will begin to open in 2020.

“We are also continuing to invest in data center construction and expansion,” said Pichai, adding that this is important for the company’s Search business as well as its Cloud business.

Porat said, “We expect to see more of an uptick in 2019 in data center investments relative to servers."

The company also increased its hiring during the quarter, saying it now employs 98,771 people, up 4,399 employees from the previous quarter. The majority of new hires were engineers and product managers. And the most sizable headcount increases were in Cloud for both technical and sales roles.

New GCP leadership

Google Cloud CEO Diane Greene announced in November 2018 that she was leaving the company. Greene joined Google in 2015 and has been instrumental in building the company’s Cloud business to contend with other major public clouds.

Since November, Greene has been working with her replacement, Thomas Kurian, who is a former top Oracle executive. Kurian and Greene worked together on 2019 planning, and Kurian officially took over the reins on Feb. 1.

Pichai said on the earnings call yesterday, “I want to thank Diane Greene for her leadership over the last three years. What Diane and her team have accomplished is phenomenal. Google Cloud is a multibillion-dollar business.”