Google Cloud growth is outpacing the company’s ad business


Google is still an advertising company, but the tech titan’s cloud business is growing faster than its advertising revenue. That’s one of the key take-aways from the company’s first quarter earnings report released Thursday.

Google Cloud Platform is one of the fastest-growing lines of revenue across Alphabet, the parent company that includes Google and other businesses like self-driving car maker Waymo, company CFO Ruth Porat said on a conference call with analysts. That growth is driven in part by a change in the way companies are working with Google Cloud.

“Over the last several months, we have noticed a change in the types of conversations that Diane [Greene] and her team are having with customers,” Google CEO Sundar Pichai said. “Increasingly, we are being asked to partner for mission-critical projects and full migrations, moving data from on-prem data centers to the cloud. We are seeing a meaningful shift, and this momentum is resulting in a fast-growing business.”

Blair Hanley Frank

Diane Greene, the senior vice president of Google Cloud, speaks at the Google Cloud Next conference in San Francisco on March 8, 2017.

Google doesn’t break out its Cloud revenue, but groups it with sales of hardware and Google Play in its “Other” segment. Revenue in those businesses totaled almost $3.1 billion during the first three months of 2017, up 49 percent from the same period a year ago. While the precise Cloud share isn’t clear, it seems like a significant driver of revenue given how effusive Porat and Pichai were about it on the call.

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