Google Cloud is growing at a 'significant', but unknown, rate

Google said its cloud division was at a run rate of $8bn earlier in the year

Google has claimed that its public cloud arm is growing at a "significant rate", but stopped short of putting a figure on the business which is challenging Microsoft and Amazon Web Services (AWS).

In the quarter ending 30 September 2019 Google's parent company Alphabet saw sales climb 20 per cent year on year to $40.5bn (£31.4bn), while operating margin fell three percentage points to 23 per cent.

Google does not break out public cloud, but the "Other" business unit in which it sits saw sales rise 39 per cent to $6.4bn. This includes revenue from other services including Android's Play app store.

On an earnings call, transcribed by Seeking Alpha, Google CEO Sundar Pichai said that revenue growth was driven by mobile search, YouTube and Cloud.

Earlier in the year he said that Google Cloud was at an annual revenue run rate of $8bn, but did not give an updated figure for the most recent quarter - instead listing examples of customers that have adopted Google Cloud.

"We saw customer momentum across multiple areas under Thomas [Kurian's] leadership," he said.

"We gave some visibility into our cloud business and we'll continue to do that periodically. The momentum has been great.

"Obviously, ever since Thomas has come in, he has continued to invest across the board. He's definitely focused a lot on scaling up our sales partner and operational teams and, it's playing out well.

"In this business, it's important for you to be in as many deal situations as possible and get those wins, which accrues over time, so we are definitely seeing the momentum."

Google added that its "most sizeable" headcount increases were in the cloud arena.

It also said that its growth in the cloud was primarily driven by Google Cloud Platform, "complemented" by growth in G-Suite.

Google announced its results a few days after Microsoft and AWS announced that growth in their own public cloud infrastructure is slowing as they become larger.

Google's results came in slightly below analyst expectations, with its share price declining around two per cent.