How big is G Suite within Alphabet’s “other revenue” (Q1 2017)

Raj Nathani
Apr 28, 2017 · 2 min read
  • 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”)

Raj Nathani

Written by

rajnathani.com

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade