AWS Propels Amazon To Another Profitable Quarter


Printer-friendly version Email this CRN article

The world's leading public cloud propelled another profitable quarter for Amazon, the company announced Thursday, as the Amazon Web Services business closed in on a $20 billion revenue run rate.

While AWS barely was mentioned in the Q3 earnings call in lieu of several questions from analysts about the integration of Whole Foods, it clearly stood out on the balance sheet.

Amazon's Q3 saw profits of $1.17 billion generated by AWS, while the sprawling business in its entirety was just slightly in the black with $347 million operating income, a 40 percent annual decline.

[Related: Amazon Cuts Cloud Prices: New AWS Price Reductions Target Reserved Instances]

Still, Amazon impressed investors with $43.70 billion in revenue, and earnings per share of $0.52, crushing Wall Street's expectations of $42.14 billion in revenue and $0.03 a share, respectively. That sent the stock up $76.07 (7.82%) to 1,048.50 in after-hours trading.

Amazon CFO Brian Olsavsky, when asked, wouldn't quantify the expected impact of recent price cuts on margins. But he did say the company carefully looked at how reductions made in December of last year affected the financials for the last quarter of 2016.

"Price cuts and new products that have lower average costs and cannibalize more expensive products is pretty much part of our business all the time at AWS," Olsavsky said.

With $4.58 billion of cloud sales in the quarter ending September 30, compared to $3.23 billion for Q3 in the previous year, AWS notched steady year-over-year growth of 42 percent. That did represent a slowdown from the 55 percent growth Q3 of 2016.

AWS profits offset higher Amazon spending in preparation for the holiday season that typically tanks the company's operating income in its third quarter.

For the nine months of the current calendar year, AWS has done $12.35 billion in sales, compared to $8.68 billion in the same period for 2016, growing 42 percent.

Driving those revenues were some big customer wins across the automotive, life sciences and tech sector. Among them, Toyota Racing Development going all-in on AWS, Hulu, and General Electric, a longtime customer, naming AWS its preferred cloud provider as the company undergoes digital transformation.

Other noteworthy milestones in the quarter leading up to the annual AWS re:Invent conference were the introduction of per-second billing, the general availability of VMware Cloud on AWS, and the release of Macie, a new security service that employs machine learning to fortify customer data.

Printer-friendly version Email this CRN article