Google Cloud revenue surge defies coronavirus turbulence

A 52% year-on-year rise negates a "significant slowdown" in Google’s ad revenue

Google Cloud has defied the current economic turbulence to experience a 52% year-on-year surge in revenue for the first quarter of 2020, despite its parent company Alphabet beginning to feel the effects.

The company's cloud business generated $2.78 billion in revenue during the first quarter of 2020, representing a 52% year-on-year surge. This is in line with its financial results from the previous quarter, with $2.6 billion in revenue representing year-on-year growth of 53%, according to Business Insider.

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This continued surge is in spite of Alphabet’s executives bemoaning a "sudden and significant" slowdown in revenue in March due to the effects of COVID-19.

Although Google's total ad revenues rose to $33.76 billion during the quarter, representing 13% year-on-year growth, this increase in revenue began to rapidly decelerate towards the end of the quarter.

"Q1 was in many ways the tale of two quarters. For our advertising business, the first two months of the quarter were strong," Google and Alphabet CEO Sundar Pichai said in an earnings call with analysts.

"In March, we experienced a significant and sudden slowdown in ad revenues. The timing of the slowdown correlated to the locations and sectors impacted by the virus and related shutdown orders. 

"As the impact of COVID-19 came into view, we delayed some ad launches and prioritized supporting our customers as many adjusted their strategies."

While the firm's quarterly financial results are slightly tarnished with a deceleration in ad revenue, the continued growth of its cloud business, led by Google Cloud CEO Thomas Kurian, offers signs of encouragement. 

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That Google Cloud has been somewhat immune from the dire economic consequences ongoing pandemic may not come as much of a surprise, given cloud providers have generally sustained heightened demand.

The number of G Suite users, for example, has risen sharply over the last few weeks. With millions of people now working from home fuelling a 25-times surge in usage for industry-focused video conferencing platform Google Meets.

This is an effect felt by major cloud players across the industry, with SAP, for example, reported an increase in revenue last week of 7% for the first quarter of 2020. Services like Microsoft Teams, meanwhile, have also experienced a massive rise in the usage of collaboration software.

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