Google Continues Cloud Momentum In Q1 As Internet Giant Lands More Enterprise Customers

Google's six-year-old cloud operations became a $1 billion per quarter business in the final quarter of 2017. That momentum has continued into 2018 with the market momentum around Google's cloud properties continuing to grow, said Google CEO Sundar Pichai said during parent company Alphabet's 2018 first-quarter earnings call Monday.

Google's cloud division, which 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 - is growing across the board, Pichai said. Google is also consistently landing bigger deals with enterprise customers, he added.

"We are signing significantly larger, more strategic deals in cloud," he said. "Our security capabilities, easy-to-use data analytics, the industry-leading collaboration platform, G-Suite, are really winning customers over."

[Related: Google's Billion-Dollar Cloud Business Takes On AWS, Azure With AI, Machine Learning]

Google doesn't specifically break out financials for the Google Cloud Platform. However, its "other revenues" category, which is fueled by cloud service and applications, Google Play, and hardware (including Nest), rose 36 percent to $4.35 billion in the quarter, up 36 percent from $3.20 billion in the same year-ago period.

During 2018's Q1, Google Cloud announced AutoML, an engine that developers with limited machine learning expertise can use to easily build machine learning models. The division has also revealed 20 new security products so far this year.

Google cloud adoption is being driven by the company's leadership in security, A.I., and machine learning, Pichai said.

"We are hearing from customers that we have an advantage in data analytics … and the fact that we really support an open, agile framework," he explained. "Security is also becoming a big differentiator for us, and it's something we have been leading for a while."

Ruth Porat, CFO of Alphabet Inc. and Google LLC, said the strong revenues from the "other revenues" category, and particularly cloud, "continues to highlight the growing contribution of non-ads opportunities" for Google.

Google's headcount grew by 4,940 during the quarter, with the most sizable group of new hires serving in technical and sales roles for its cloud division, Porat said.

Google is actively expanding its cloud infrastructure to meet increased demand, the company said. Google unveiled new regions in Canada, Japan, the Netherlands, and Saudi Arabia for its cloud offerings, bringing the company's total number of recently launched or upcoming regions to 20, Pichai said.

Parent company Alphabet reported revenue of $31.15 billion for the first quarter of fiscal 2018 (ended March 31), up about 26 percent from the $24.75 billion the company reported for the same year-ago quarter.

Alphabet's net income was $9.40 billion, or $13.33 diluted earnings per share (EPS) for the quarter, up from $5.43 billion, or $7.73 EPS, during the same period last year.

The Internet giant bested Wall Street's expectations of $9.28 EPS and revenues of $30.29 for the quarter.