Google Cloud is on a $8 billion annual revenue run rate as Amazon Web Services pushes the $33 billion run rate mark in what amounts to a burst of disclosure for customers to ponder.
Now the storyline will be that Google Cloud is on the move and under CEO Thomas Kurian it will gain share and grow with a bit of organic and inorganic growth. However, Microsoft is gaining larger contracts with Azure, but the company doesn't disclose much as its flagship cloud service is lumped into a commercial cloud category.
Here's a look at recent disclosures from the three big cloud vendors.
Amazon Web Services
AWS reported second quarter revenue of $8.38 billion with operating income of $2.12 billion. That revenue growth of 37%, which raised some concerns since it is slowing from previous quarters, was good for an annual run rate of $33 billion.
Perhaps the big takeaway is that AWS in a quarter has more revenue than Google Cloud's annual revenue run rate. Gartner kept AWS as its top IaaS provider for 2019.
Amazon CFO Brian Olsavsky said:
We had a growth year-over-year in our run rate from $24 billion to $33 billion, so 37% growth. The $9 billion that we increased our run rate by was second only to Q4 of last year as far as our history. So as you can tell, we've been pretty transparent with our AWS revenue and income numbers, we've been breaking it out since 2015. And we're very happy with the growth in absolute dollar terms, we're seeing the pickup from customers and their usage, their increased pace of enterprise migrations, increased adoption of our services, especially our machine learning services.
Olsavsky noted the following:
- AWS is seeing "a lot of increased adoption in machine learning services, especially SageMaker."
- "Database is also a multibillion-dollar business propelled by Aurora. So we're seeing a lot of strength. We're seeing strong usage growth that outpaces revenue growth as usual, increased pace of enterprise migrations. So I would say that, on a percentage growth basis, again, on a dollar basis, it's growing very strongly."
- AWS is lapping strong growth of about 50% from a year ago.
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Google CEO Sundar Pichai noted a few key items on the company's second quarter earnings conference call.
- Google Cloud is on a more than $8 billion annual revenue run rate. Google Cloud includes Google Cloud Platform and G Suite. It is worth adding that Google isn't breaking out components of Google Cloud revenue where the last time it disclosed sales were roughly evenly split between G Suite and GCP.
- Pichai took a not-so-subtle dig at Amazon Web Services when he said "retailers like Lowe's are leveraging the cloud as one of the important tools to transform their customer experience and supply chain."
- AI and machine learning are Google Cloud's primary selling point.
- Google Cloud is "very competitive when we are there in the banks" and financial services is a big push for the company.
- Growth will be via acquisition where Google Cloud has gaps. Exhibit A is the Looker purchase.
- And Anthos is seen as Google Cloud's big multi-cloud and hybrid cloud play.
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Microsoft Azure revenue and run rate remains a mystery as it is lumped into commercial cloud in terms of sales and bookings. In addition, Azure falls into the Intelligent Cloud segment in Microsoft's earnings.
However, Microsoft CEO Satya Nadella and CFO Amy Hood outlined the following nuggets on Azure:
- Revenue grwoth was 64% for Azure.
- "In FY '19, we closed a record number of multi-million-dollar commercial cloud agreements with material growth in the number of $10 million-plus Azure agreements," said Hood.
- Revenue growth will be balanced between strong growth in consumption based Azure services and moderating per-user business.