- Amazon, Microsoft, and Google reported earnings this week, providing a window into how fast their respective cloud businesses are growing.
- It’s hard to know exactly how the cloud providers’ revenues stack up because the companies report earnings in different ways, but below is what we know from earnings, analyst estimates, and what the companies say about how they report revenue.
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The top cloud-computing players Amazon, Microsoft, and Google all reported earnings this week. The companies each report their numbers in different ways, which makes it hard to know exactly how their cloud revenues stack up, but the numbers still provide a window into how fast their respective cloud businesses are growing.
Here are the highlights:
- Amazon Web Services: Amazon reported $11.6 billion in third-quarter revenue for its cloud business, up about 29% from the same quarter last year. That’s tied for its lowest growth rate since at least the fourth-quarter of 2018, but analysts generally attribute the slowdown to the law of large numbers. Basically, AWS’s increasingly huge revenue base makes it harder to demonstrate large growth percentages every quarter.
- Microsoft: Microsoft reported $15.2 billion in fiscal first-quarter sales for its “commercial cloud” business, which includes its Azure platform as well as software like Office 365, up 31% year over year. Microsoft doesn’t report specific revenue figures for its Azure cloud business but said that Azure revenue grew 48% year over year. Two prominent analysts estimated that Azure accounted for 17% of Microsoft revenue, or $6.3 billion
- Google: Google Cloud grew 45% year over year and generated over $3.4 billion in revenue this quarter. The figure includes both its cloud platform and its cloud-based software like Gmail.
The biggest differentiator in how the cloud giants report earnings is that Microsoft and Google both include their popular productivity tools — Office 365 and G Suite (recently renamed Workspace) — in their figures.
AWS, generally considered the market leader of the cloud, “consists of amounts earned from global sales of compute, storage, database, and other service offerings for start-ups, enterprises, government agencies, and academic institutions,” according to the company’s securities filings.
In other words, almost all AWS revenue comes from its cloud-infrastructure business — Amazon doesn’t have any products on the scale of Microsoft Office 365 or Workspace that are likely to make up much of the “other service offerings” portion of that segment.
While the lack of apples-to-apples comparison between the firms has long frustrated analysts and investors, it may soon be possible to better parse and compare Amazon’s and Google’s numbers: Google CEO Sundar Pichai announced this week that the company would break out Google Cloud as a separate reporting segment in its earnings beginning in the fourth quarter, which could provide more transparency on how much revenue comes from its cloud platform and how much comes from Workspace.
Another way to compare the companies is the percentage of total revenue their respective cloud businesses account for:
- AWS accounted for about 12% of Amazon’s overall revenue for the quarter.
- Commercial cloud accounted for 40.8% of Microsoft’s overall revenue for the quarter (though two analysts estimated Azure specifically made up 17% of Microsoft revenue).
- Google Cloud accounted for about 7% of Alphabet’s overall quarterly revenue.
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