Google Cloud Q3: Revenue Growth of 90%, 95%, or 100%

Bob Evans (0:00)

Hello, my friends, welcome back to Cloud Wars Minute. We got some big numbers coming out later this week from SAP for Q3, and then next week, we've got Google Cloud, Microsoft, ServiceNow, all on October 28th and October 29th. We got AWS, Palantir will release its Q3 numbers the first week of November. But let's take a look here at Google Cloud's Q3. I think there's a very good chance that revenue growth for Q3 could be anywhere from 90 to 95, even 100 percent. Let me show you the numbers that drive this thought for me. And again, Alphabet will report its results October 28th. If we look over the last four quarters at Google Cloud's growth, their revenue and their quarter to quarter incremental growth, which is becoming for me an extremely important metric. Here's what we get. So again, going back four quarters, Q3 of 25, they grew 34% a little over 15 billion. Their incremental quarter to quarter growth, Q3 versus Q2 was $1.6 billion. Q4, that jumped up to 48%, 17.7 billion. An additional incremental 2.5 billion versus the previous quarter.

Q1 of this year, 63% growth, $20 billion in total revenue, up $2.3 billion. Now, the big breakthrough came for the quarter ended June 30th. They posted growth of 82%, $24.8 billion. Incremental growth over Q3, $4.8 billion. Now, if we project for the quarter ended September 30th or Q3, here's a couple of things that are possible.

To hit 90% growth for Q3, Google Cloud would have revenue of $28.9 billion, and that will require them to grow in Q3 versus Q2 by $4.1 billion. That's a huge stretch, but look what they did in Q2, $4.8. So even if they bring in less incremental revenue this quarter, they could still grow 90%.

Now, let's say 95%.

That would bring revenue in at $29.6 billion and the incremental revenue of $4.8. So if they match incremental revenue in Q3, what they did last quarter in Q2, then they're going to have a growth rate of 95%.

Now, to hit this 100% number, their revenue would have to be $30.4 billion. That would require an incremental growth, Q3 versus Q2, of $5.6 billion. It's a big stretch, big number, but if you look at the trajectory here of what they've been doing the past few quarters, it is a big stretch, but it is by no means unreasonable or unfeasible. And I just want to point out, I think a couple of the force multipliers here, the powerful ecosystem that Google Cloud has built and the contributions it is making as customers are spending more quickly than they originally contracted for. Across the ecosystem under Kevin H. Pirani, and also strategic industries under Chris Sakaloski, is going to be another key indicator here. They're really doing well in some of the key areas. They cover from healthcare, financial services, life science, pharmaceuticals, and others. This is going to be a place that I think they're going to get a big payoff from that. So, projections, also known as guesses or predictions, can be tricky here. And what's interesting with Google Cloud is, you look at that over the last four quarters, the growth rates, 34%, 48%, 63%, 82%, phenomenal numbers and a phenomenal increase. They're not just getting bigger quarter to quarter, but the growth rate gap, the jumps they're making is bigger from, you know, the first one they did there that 34% now to 48% that was up 14 to 63 It's up 15 points to go to 82 It's 19 point jump. So they're they're shown they can make these huge increase. Certainly AI's big powerful force behind that. They're increasingly successful Cloud business as well. So I do though want to bring some, you know, groundedness to this. Say Google Cloud grows only 90%. That is still just phenomenal. Twice as fast, at least as AWS, about three times faster than Microsoft is growing. 95%, 100%. These are astonishing figures for a business as big as Google Clouds. It shows just how well the number one company on the Cloud Wars top 10 is doing here. We've got a detailed article that will offer more perspectives on this coming up on cloudwars.com. I hope you check that out. Thanks for being with us here at Cloud Wars Minute, and I hope you have a fantastic day.