How big is G Suite within Alphabet’s “other revenue” (Q1 2017)
2 min readApr 28, 2017
- Google (Alphabet) just reported their 2017 Q1 earnings.
- The “Google other revenue” brought in ~$3.1 billion for the quarter.
- “other revenue” includes revenue from Play Store, G Suite, Google Cloud Platform, other non-ad services, and hardware sold by Alphabet.
Calculating G Suite’s revenue for the quarter
- As of the last quarter of 2016 there were more than 3 million businesses using G Suite. If we assume that the actual number is a few percentage points higher than the exact 3 million figure and factor in a liberal growth rate of 10% for the quarter (roughly extrapolated from their 50% YoY growth from 2015–2016), we could approximate there to be 3.45 million businesses as of today using G Suite. (Source: https://techcrunch.com/2017/01/26/more-than-3m-businesses-now-pay-for-googles-g-suite/)
- The average size of a business is ~21 employees in a developed country such as the US. (Source: https://www.bls.gov/opub/mlr/2012/03/art4full.pdf). Purely out of intuition, one would assume that current G Suite customer base would skew towards small to medium sized businesses, thus we shall deduct ~10% from the average of 21 and conclude that the average size of a business using G Suite is ~19 employees (a big assumption we’re making is that every employee has a unique G Suite account).
- If we take the odds of a business picking between G Suite basic ($5/employee/month) and business ($10/employee/month) at equal likelihood, and ignore G Suite enterprise or the additional licensing costs for extra storage on basic, then we get a weighted average price of $7.5/employee/month.
- ~3.45 million businesses * 19 employees/business * $7.5/employee/month * 2.96 months (for the quarter as it includes February)
= ~$1.5 billion (= half of “other revenues”)
