Amazon Stuns Wall Street As Cloud Sales Soar In Q3


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Amazon's cloud dominance can't be stopped.

The e-commerce powerhouse had a high-flying quarter, and once again its market-dominating public cloud juggernaut, Amazon Web Services, was a standout in the company's financial results.

AWS brought in $2.09 billion in revenue in the third quarter, a 15 percent uptick from the second quarter and 78 percent above the same quarter of the prior year when it brought in $1.17 billion in sales.

AWS also became more profitable in the third quarter of 2015, with margins expanding from the previous quarter's 21.4 percent to 25 percent, according to Amazon CFO Brian Olsavsky.

On the strength of AWS, Amazon blew away financial analysts' expectations by 30 cents, bringing in a profit of $79 million, or 17 cents per share, for the third quarter, ended September 30, compared to loss of $437 million, or a loss of 95 cents per share, in the same quarter a year ago. Amazon's ability to turn a profit for the quarter when Wall Street had projected it would be in the red (predicting a loss of 13 cents per share, according to Thomson Reuters) sent shares up more than 10 percent after the close of the market.

[Related: AWS Once Again The Star Of Amazon Earnings Call]   

Olsavsky credited the sustained AWS growth to innovation in the cloud platform, which he said has been enhanced with 530 significant new features during the year.

"We enjoy leading this business," Olsavsky said. "Customers responded well. We believe we're adding new services and features at a rate faster than any others."

Those new features, independent of price cuts, enable AWS customers to lower the cost of their infrastructure. AWS has also dropped prices eight times since a large reduction in April 2014 received much public attention, Olsavsky added.

Olsavsky and Phil Hardin, Amazon's director of investor relations, pivoted away from investor inquiries about the sustainability of AWS' current margin levels and what margins might look like in the future.

In response to that question from a financial analyst, Hardin only said, "This is a young and rapidly growing business," one in which growth rates, margins, and capital expenditures "can be lumpy."

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