Google Cloud’s parent company Google is set to report the financial earnings result of its fourth quarter 2023 on Jan. 30.
Will Google discuss the broad layoffs at the company that have impacted over 1,000 employees this month?
Can Google Cloud surpass the $9 billion quarterly revenue threshold and remain a profitable company?
Did the cloud company’s artificial intelligence push in 2023, specifically in generative AI, pay off in tangible revenue growth during the fourth quarter?
Will Google Cloud grow sales at a faster pace than Microsoft Azure and Amazon Web Services?
CRN breaks down these questions and more as we take a look at five key things partners, investors and customers should watch for ahead of Google’s fourth quarter financial earnings report on Tuesday at 4:30 pm ET.
[Related: Google Cloud CEO: New Hugging Face AI Partnership Makes GenAI More ‘Impactful’ For Developers]
No. 1: Will Google Cloud Surpass $9 Billion? Zacks Things So
Google Cloud is the third largest cloud computing provider in the world, owning approximately 11 percent share of the global cloud services market as of third quarter 2023. The Mountain View, Calif.-based cloud giant has been increasing sales at such a high rate that it seems possible that Google Cloud generated a record $9 billion during Q4 2023.
Zacks Consensus Estimate predicts that Google Cloud will report total earnings of $9.04 billion for its fourth quarter 2023. This would represent a year-over-year growth rate of over 23 percent.
This 23 percent growth rate is on par with Google Cloud’s financial results from previous quarters in 2023. In third quarter 2023, for example, Google Cloud grew sales 22 percent year over year by capturing $8.4 billion in sales.
The Takeaway: If Zacks Consensus is correct, Google Cloud can in fact surpass the $9 billion revenue threshold. A 23 percent year-over-year sales growth rate would be a accomplishment for Google Cloud as the cloud giant would be on a whopping $36 billion run rate.
Click through to read the four other Google Cloud keys to watch for during Google’s Q4 2023 earnings
No. 2: Will Layoffs Discussion Be Top Of Mind?
This month, Google Cloud’s parent company Google laid off over a thousand employees from different business units.
Google cut a few hundred employees in each division inside its Google Assistant software business. The company also confirmed laying off hundreds inside its Devices and Services business unit, which mostly impacted its augmented reality (AR) division as well as Google’s Nest, Fitbit and Pixel hardware groups. The company also recently let go of about 100 employees from YouTube.
However, it is key to know that Google CEO Sundar Pichai told employees that layoffs in 2024 won’t be as significant as 2023. In January 2023, Google unveiled it would be laying off 12,000 employees.
“We have ambitious goals and will be investing in our big priorities this year,” Pichai wrote in an internal memo to Google employees. “The reality is that to create the capacity for this investment, we have to make tough choices. … These role eliminations are not at the scale of last year’s reductions and will not touch every team.”
The Takeaway: Google has declined to comment to CRN on whether layoffs have specifically impacted Google Cloud. It will be key to see if Google executives on Tuesday’s earnings call will talk about the recent layoffs and if unveil any information on whether Google Cloud’s employee headcount is being impacted.
No. 3: Can Google Cloud Continue Profitability?
For years, Google Cloud was in the red. The company was not profitable due to investing billions each quarter on R&D, innovation and expanding its global reach with new data centers and cloud regions in order to better compete with AWS and Microsoft.
However, that all changed in 2023.
In Q1 2023, Google Cloud reported a profit for the first time in its history by generating $191 million in operating income. The company has reported profitability in each of the three quarters thus far in 2023, including record operating income of $395 million in Q2 2023 compared to a operating loss of $590 million in Q2 2022.
The Takeaway: If Zacks Consensus Estimate that Google Cloud generated $9 billion in Q4 2023 comes true, it is highly likely the company will report profitability in the quarter. If Q4 resulted in a profit, Google Cloud’s profitability year of 2023 could become the norm for the company.