Fincredible MacroTalk January 19th: Cloud Adoption Accelerating
Management commentary on cloud services and adoption from $DBX $BABA $ORCL $ADBE $GOOG $IBM $VMW $CSCO $CRM $HPE $AMZN $MSFT $FDS $GS $JPM $BLK
Two years into the pandemic, the momentum for cloud businesses is still strong. Over the past few months, both cloud service providers and customers have talked about how the cloud is changing their businesses. Given the importance of cloud services in the digital transformation of the world, we’ve decided to dedicate this MacroTalk to the topic.
All quotes are sourced from Fincredible.
Cloud Service Providers
Cloud service providers like Alphabet, Microsoft and Alibaba group recently spoke about the momentum they’re seeing in the demand for their cloud offerings. These companies offer solutions that help solve critical problems while also delivering cost savings. The value proposition is clear, and it will grow even more as more companies adopt the cloud.
However, the perfect solution does not exist. As we will see ahead, the search for the perfect formula regarding servers, storage, databases, networking, analytics, and intelligence is far from over.
“Our customers want digital and cloud-enabled solutions that allow them to move with greater speed, agility and efficiency. We're already seeing the positive impact of our investments to drive accelerated innovation across high-growth areas, including hybrid cloud, web scale, cloud security, 5G, WiFi 6, 400 gig and full stack observability.”
Charles H. Robbins, CEO
“While people can store their content in a growing number of different cloud platforms, what they need most is 1 place that keeps their content organized so they can spend more time on their work. We view advanced organization functionality as a competitive advantage, and delivering this to users will help drive both retention and conversion.”
Andrew W. Houston, CEO
Ann Lewnes, CMO and Executive Vice President
“Turning to the Google Cloud segment. Revenues were $5 billion for the third quarter, up 45%. GCP's revenue growth was again above cloud overall, reflecting significant growth in both infrastructure and platform services. Strong revenue growth in Google Workspace was driven by robust growth in both seats and average revenue per seat. Google Cloud had an operating loss of $644 million.”
Ruth M. Porat, CFO
“We now have more than 3,500 clients using our hybrid cloud platform, not only fuels our Red Hat revenue performance, but also provides a solid base for the multiplier effect across software and services.”
Arvind Krishna, CEO
International Business Machines Corporation Q3 2021 Earnings Call
“AliCloud's revenue grew 33% year-on-year to RMB 20 billion during this quarter, which reaccelerated compared to the June quarter growth. We saw strong revenue growth from customers in the Internet, financial services and retail industries. AliCloud generated an adjusted EBITDA of RMB 396 million given strong revenue growth and economical scale.”
Wei Wu, CFO
“We continue to strengthen our Compute and Storage businesses where we saw strong orders and profitability in fiscal year 2021. In Compute, orders increased more than 10% in fiscal year '21 and we delivered operating margins of 10.8%, up 260 basis points year-over-year. We are making bold moves to transform our Storage business into a cloud-native data services business, which resulted in a high single-digit order growth and gross margin expansion, up 130 basis points year-over-year.”
Antonio Fabio Neri, CEO
“Sales Cloud now joins Service Cloud, which became a $6 billion business just 2 quarters ago. And Service Cloud continues to grow over 20% at scale. These are 2 massive businesses growing in the double digits, and their success is a testament to the strength of our core.”
Amy E. Weaver, President and CFO
“It's clear that multi-cloud will be the model for digital business for the next 20 years and in this vibrant dynamic marketplace, the pace of innovation is relentless. VMware is at the center of it.”
Rangarajan Raghuram, CFO
Brian T. Olsavsky, CFO
“We are off to a fast start in fiscal 2022 with Microsoft Cloud quarterly revenue, surpassing $20 billion for the first time, up 36% year-over-year. The case for digital transformation has never been more urgent or more clear. Digital technology is a deflationary force in an inflationary economy. Businesses small and large, can improve productivity and the affordability of their products and services by building tech intensity. The Microsoft Cloud delivers the end-to-end platforms and tools organizations need to navigate this time of transition and change.”
Satya Nadella, CEO
“We have a highly differentiated strategy from our competitors where we are the only company able to offer the combination of applications and infrastructure in the cloud. We have best-of-breed capabilities in both infrastructure and apps like HR and ERP, but also a highly differentiated set of industry-specific cloud SaaS applications. And of course, our second-generation cloud with autonomous databases are unique in their performance, security and dependability.”
Safra Ada Catz, CEO
Cloud Customers
Cloud customers like Factset Research and Goldman Sachs emphasized that their shifts towards the cloud have more to do with how they interact with clients than cost savings. The money saved from the shift to cloud services is certainly appealing, but the efficiency gains and friction reduction from moving to the cloud are the main selling points.
“I mean for FactSet, we're more than halfway through our program to move to the public cloud. It's a multi-cloud strategy. And we're also, as you know, partnering very well with firms like Snowflake and Amazon, which we've both been public about that. So the reason that we're moving so quickly there is our clients are moving quickly to the cloud. Almost every single firm you talk to is going through some form of digital transformation. So the fact that we're so focused on this, and we've made so much progress, really allows us to sit down with these clients and have our tech teams face off and talk about the technology stack, what we can do to help them and what we can do to help them rationalize their spend across content -- technology providers, but also content providers.”
Frederick Philip Snow, CEO
“We continue to find more ways to migrate certain platforms to the cloud, which gives us more efficiency and ability to connect with our clients and deliver resources to our clients. This partnership with AWS allows us to take our data sets inside Goldman Sachs. And if you think about SecDB and all the trading data sets and information that we have inside, in the old model, clients come to us, we use that data and we give them feedback so they can transact. In the new model, we're allowing an ability for clients to connect directly into that so they can develop directly on that platform with our data sets, which will allow them to think differently about their execution decisions and priorities. There are different things that can happen from that.”
David Michael Solomon, Chairman & CEO
“We are obviously migrating Aladdin from BlackRock managed data centers to the cloud. And we think that, that partnership with Microsoft, in particular, brings a number of enhanced capabilities to both ourselves and Aladdin clients. I mean the big 4 for us are to localize data hosting. As Larry talked about, really unlocking growth as a key part of our strategy to open Aladdin, where clients are really looking to use both data and APIs in ways that differentiate them and help to express their own competitive advantage. We're looking to accelerate innovation, and finally, migrating to the cloud is going to help us support greater computing scale and elasticity at our clients as we see client demand to use data clearly increasing. More importantly, though, it's beyond just the cloud. I mean we're making investments really to address the needs of what we consider the investor for the future.”
Gary Stephen Shedlin, Senior MD & CFO
“When it gets modernized, to the cloud, the cost savings by running that and marginalizing it will be $30 million or $40 million a year. That isn't the reason we're doing it. The reason we're doing it is once you get that to the cloud that the database is that it uses to feed its risk, marketing, fraud, real-time offers and stuff like that become accessible to enormous app and machine learning. So that you can -- when Mike Mayo is going home on a Friday night, we can offer you -- we know what you like to eat at steakhouse, so you can hear immediately offers, and fraud stuff is 10x what it is today. And so that's the real value. The value isn't the immediate cost save that you've gone from -- you're saving $30 million running this application a year.”
James Dimon, Chairman & CEO
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