Google Cloud was the bright spot in Alphabet’s Q1 numbers this week, with revenues for the division up 44% year-on-year to $5.8 billion. While the business reported an operating loss of $931 million, that was down from $974 million a year ago. Google Cloud now makes up 8.4% of Alphabet’s overall revenues, up from 7.3% a year ago.
CEO Sundar Pichai pointed to key areas of note with regards to the cloud operation:
First, cybersecurity, where we introduced new offerings, including Assured Workloads to address digital sovereignty in the European Union; Virtual Machine Threat Detection, a first-to-market agentless malware detection capability; an advanced intrusion detection system for network threat detection.
Organizations like T-Mobile and DoorDash are protecting their critical systems and data with Google Cloud's trusted cybersecurity products. These include Security Command Center, which helps many companies, including UKG, Ultimate Kronos Group, and Ocado Group, monitor and manage their security posture and risk.
Our leading threat detection and response platform, Chronicle, is now paired with Simplify to more quickly automate incident detection and resolution. We also announced our intent to acquire Mandiant, a leader in dynamic cyber defense and response, to help protect customers from the most advanced threats.
Next up was the firm’s data cloud ambitions, of which he said:
We continue to evolve a leading data cloud with serverless Spark to run batch Spark workloads; BigLake, a new storage engine that unifies data warehouses and lakes; and Dataplex, which provides unified management and governance of data across data warehouses and lakes. Our unified data cloud and AI platform is helping organizations like KeyBanc, LG Electronics, and Macy's work intelligently with data across multiple clouds.
BigQuery, our leading solution for analytics, is helping customers like Kraft Heinz, Mercado Libre and we’re to help create more personal consumer experiences. BT Group, UPS and other leading brands continue to tap our deep expertise in artificial intelligence and machine learning to power their organizations. This includes our Contact Center AI platform, which helped The Home Depot improve their call containment by 185%, creating a more positive customer support experience. We are proud to share that more than 700 technology partners power their applications with our data cloud.
There’s also ongoing focus on Google Workspace, he said:
To support hybrid work, we recently introduced new collaboration features, including bringing Google Meet directly into Google Docs, Sheets and Slides. You can now see and hear your team as you collaborate in real time without the need to schedule meetings. Google Meet can now live stream to up to 100,000 people who can also participate in Q&A and polls.
We also launched the next wave of innovation in Google Docs with smart canvas, including auto-generated summaries and pageless format in Docs, smart chips and automating workflow using Gmail. Smart Canvas has seen very rapid uptake with more than 6 million checklist and 6 million smart chips being added to documents each week. These innovations are helping employees adapt to hybrid work at large enterprises like Equifax and Ocean Network Express, digital natives including Flipkart and organizations like the University of Alberta.
As for Google’s own hybrid working thinking, Pichai said the firm will be opening its purse:
To help support our own flexible work plans, this year, we plan to invest approximately $9.5 billion in our US offices and data centers, creating at least 12,000 new Google jobs in the US, in places like New York and Atlanta. To enable our long-term growth, we are investing in areas like Cloud, AI, YouTube, Search and beyond. In 2020 and 2021 combined, we invested $40 billion in research and development here in the US. Beyond the U.S., we have announced new office investments in London and Warsaw and a new product development center in Nairobi.
Overall, Alphabet’s numbers were disappointing - net income was down $1.5 billion year-on-year, while overall revenue for the quarter was up by 23%, but that’s a marked slowing down from last year’s 34%. What was of note was that Google Cloud Platform’s revenue growth is faster than Google Cloud, with infrastructure emerging as the current sweet spot, albeit one that’s still a long, long way behind Microsoft Azure and Amazon Web Services. But the direction of travel is positive.