Tech Transformers

Google tripled the number of $500,000 plus cloud deals in the last year

Key Points
  • Google closed three times as many cloud deals over $500,000 in the second quarter of 2017, than in the same period last year.
  • Alphabet also made 1,614 new hires in the June quarter, with a "sizeable" number coming in the cloud division.
  • Google's other revenues, which includes its cloud business, rose 42.2 percent year-on-year in the second quarter.
Google CEO Sundar Pichai
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Google's cloud business closed three times more deals valued over $500,000 in the second quarter of 2017, than in the same period last year, the search giant's Chief Executive Sundar Pichai said on Monday.

Pichai made the comments on parent company Alphabet's second quarter earnings call, in which he gave the only indication of the performance of Google's cloud division since the company does not break out individual results.

"Google Cloud Platform, GCP, continues to experience impressive growth across products, sectors and geographies. And increasingly with large enterprise customers and regulated sectors," Pichai said.

"In Q2, the number of big deals we closed worth more than half a million dollars is three times what it was last year. Responding to the growth in existing and new customers around the world, we continue to invest in data centers to provide them the fastest most reliable service."

Google reported earnings that beat analyst expectations in the June quarter but were weighed down by a record $2.7 billion fine handed to it by European Union (EU) regulators last month.

EU fine already 'baked in’ for Alphabet: Pro

Its cloud business is accounted for in the "other revenue" section of its earnings statement which also includes hardware like its Pixel smartphone range. Google's other revenues rose 42.2 percent year-on-year to just over $3 billion in the second quarter.

Alphabet also made 1,614 new hires in the June quarter, with the majority coming in the cloud division.

"The most sizeable headcount additions were once again made in cloud, for both technical and sales roles, consistent with the priority we place on this business," Alphabet Chief Financial Officer Ruth Porat, said on the earnings call.

The company's cloud business is made of two key parts. The first is the Google Cloud Platform, which includes storage, networking, artificial intelligence applications, and tools for developers. The second is G Suite, which is its set of products that include the Gmail email service and Docs.

'Momentum ahead'

While Google trails Amazon and Microsoft in the cloud, it has big ambitions. Earlier this year, the head of Google's cloud business Diane Greene said the company could surpass Amazon as the market leader by 2022.

Alphabet earnings: What investors learned from the numbers

Google has been expanding its data centers, hiring, and recently signed partnerships with SAP and Nutanix to expand its offering. All of these factors, Pichai said, mean Google is well-positioned in the cloud space.

"G Suite working together with GCP, we are seeing increasing win rates and adoption across enterprise customers," Pichai said.

"We are set up incredibly well and look forward to the momentum ahead."