Google Cloud boss is focused on growth: ‘We need scale in order to be profitable’ – CNBC

Thomas Kurian, chief executive officer of cloud services at Google LLC, speaks during the Google Cloud Next '19 event in San Francisco, California, U.S., on Tuesday, April 9, 2019. The conference brings together industry experts to discuss the future of cloud computing.

Michael Short | Bloomberg | Getty Images

Google cloud chief Thomas Kurian said Wednesday that he's focused on growth for now, with an eye toward profitability later on.

"We're working closely with Alphabet CFO Ruth Porat to improve our operating margin and operating loss, which will both benefit from increased scale over time," Kurian told Heath Terry, a Goldman Sachs managing director, at the virtual Goldman Sachs Technology and Internet Conference. "Scale will bring material improvements in profitability. And we're very focused on that. We know in this business we need scale in order to be profitable."

Investors are looking for reassurance that Google's its years-long investment in cloud computing can contribute to rather than detract from the profitability of Google parent Alphabet. Growth could also make Google more competitive with market leader Amazon, which derives almost half of its income from its cloud division.

Kurian's comments come a week after Google parent Alphabet for the first time disclosed the operating results of the cloud unit, which includes the Google Cloud Platform public cloud infrastructure and Google Workspace productivity software subscriptions. The unit has lost at least $4 billion in each of the last three years, and finished 2020 with a loss of $5.61 billion on $13.06 billion in revenue. Revenue growth slowed slightly from 53% in 2019 to 47% in 2020.

The Google Cloud organization remains focused on accelerating revenue growth, said Kurian, who replaced Diane Greene as head of Google's cloud group two years ago after spending two decades at Oracle.

Kurian said Google is keen to launch cloud infrastructure in more countries in order to satisfy organizations' regulatory needs. He pointed to uptake in Indonesia and South Korea. At the same time, Google Cloud continues to invest in expanding its sales function. Kurian said the business is on track to expand its direct sales organization by more than three times

"We really believe we have a good line of sight on how as you scale investments," he said. "That opens up markets and opens up revenue."

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Google Cloud boss is focused on growth: 'We need scale in order to be profitable' - CNBC