Parent company Alphabet is focused on “longer-term path to profitability” 

Google Cloud – and the rest of parent company Alphabet – handily beat analyst’s expectations with fourth quarter results reported Tuesday. Alphabet reported earnings per share (EPS) of $30.69, rising 37.6% year over year (YOY). Revenue was $75.33 billion, up 32.4% YOY. 

Google Cloud revenue was $5.5 billion, up 45% YOY – again, above analyst projections. Google Cloud’s operating loss narrowed by 28.23% YOY for the fourth quarter, dropping from $1.24 billion a yer ago to $890 million.

“Alphabet’s backlog increased more than 70% to $51 billion, most of which is attributed to Google Cloud,” said Alphabet CEO Sundar Pichai. 

Citing enterprise and public sector business wins and a rapidly expanding sales force, Pichai told analysts that Alphabet saw more than 80% growth in total deal volume for Google Cloud Platform. Google Cloud’s billion-dollar deal count grew by more than 65% for 2021, he added.

“Customers come to Google Cloud because of our expertise in bringing enterprises and consumer ecosystems closer together,” said Pichai.

Google Cloud Platform (GCP) customer spend doubled through channel partners in 2021, said Pichai. More than 2,000 new cloud products and feature releases emerged during the year, he added. Pichai counted four categories: Google Workplace; data cloud and Artificial Intelligence/Machine Learning (AI/ML); multi-cloud infrastructure; and cybersecurity.

Alphabet is playing the long game with Google Cloud because of its huge opportunity, said Ruth Porat, Alphabet CFO. Porat said the company will continue to invest aggressively in cloud accordingly.

“We do remain focused on the longer-term path to profitability and over time, operating loss and operating margin should benefit from increased scale,” said Porat.

Google grows its edge with telecom

“We believe new auto scaling in our Kubernetes engine, which allows customers to run 15,000 node clusters outscales the competition by up to 10 times. Our edge cloud helps us grow in telecommunications, driving partnerships in Q4 with Indosat Ooredoo Hutchison, Telenor and Verizon. Our edge cloud helps us grow in telecommunications,” said Pichai. 

In November, Telenor announced a strategic digitization partnership with Google Cloud. The state-owned Norwegian telco is leaning on Google Cloud to help with its network modernization efforts. As Telenor transitions to a cloud-native 5G core, Google Cloud is developing Virtual Network Functions to accelerate network disaggregation.

In November, Google Cloud and Verizon announced Verizon 5G Edge with Google Distributed Cloud Edge. The mobile edge computing (MEC) solution is aimed at enterprises needing high-bandwidth, low-latency communications for factory automation, intelligent logistics and autonomous vehicle and drone operation.

Alphabet also announced a 20-for-1 stock split. The split takes effect after the close of business on July 15, 2022. The stock closed at $2,752.88 per share in regular trading on Tuesday.

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