Google Cloud CEO Thomas Kurian said the company had remaining performance obligations of $106 billion with half that sum converting to revenue in the next two years. If that RPO converts, Google Cloud revenue will be $58 billion by 2027.
Kurian was speaking at the Goldman Sachs Communacopia + Technology conference. He said Google Cloud is capturing customers wins at a faster clip with multiple ways of monetizing services. There's consumption, services and subscriptions and increasingly value-based models.
"We also monetize some of our products through value-based pricing. For example, some people use our customer service system say, "I want to pay for it by deflection rates that you deliver." Some people use our creative tools to create content, say, "I want to pay based on what conversion I'm seeing in my advertising system," he said.
- Google Cloud's Gemini for Government ups the LLM price war
- Oracle Cloud Infrastructure to add Google Cloud Gemini models
- Atlassian outlines partnership with Google Cloud, strong fiscal Q4
- Google Cloud tops $50 billion annual revenue run rate in Q2
Kurian added that Google Cloud is also successful upselling customers to consume new models and higher consumption quotas. He said:
"65% of our customers are already using our AI tools in a meaningful way. Those customers that use our AI tools typically end up using more of our products. For example, they use our data platform or our security tools. And on average, those that use our AI products use 1.5x as many products than those that are not yet using our AI tools. And that leads then customers who sign a commitment or a contract to over-attain it, meaning they spend more than they contracted for, which drives more revenue growth."
According to Kurian, Google Cloud is also focused on operating discipline to boost margins. Kurian said Google Cloud is being "super-efficient from the point of view of using our fleet and our machines so that we get capital efficiency."
Going forward, Google Cloud will continue to build out its suite of products, go-to-market team and infrastructure to become more efficient, said Kurian.
"To give you a sense of the scale, if you compare us to other hyperscalers, we are the only hyperscaler that offers our own systems and our own models, and we're not just reselling other people's stuff. The volume of tokens we process, twice other providers in half the time. So roughly 4x the volume. We have a lot of different companies using these AI models from companies creating digital products to using AI within their organization."
