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Despite Numerous Price Cuts, Amazon's Cloud Business Grows 43 Percent On Its Way To $15B Run Rate

The world's largest cloud expanded its business by 43 percent year-over-year. Amazon's CFO promised even more acceleration in the pace of cloud innovation

Amazon's cloud business maintained aggressive first-quarter growth despite numerous price cuts and its already overwhelming share of the market, according to the company's financial results, released Thursday.

Amazon Web Services grew by 43 percent year-over-year, generating $3.66 billion in sales and netting Amazon $890 million in profit for the quarter ended March 31, a slight uptick in margins from the same quarter of the previous year.

"We're happy with the business and the team," Amazon CFO Brian Olsavsky said of AWS during a conference call with Wall Street analysts, perhaps no surprise given the continued growth and profitability of the cloud juggernaut.

The quarter was the first to fully absorb seven AWS price decreases that were implemented near the end of last year. Only about a third of their impact was felt in the previous fourth-quarter results, Olsavsky said.

[Related: King Of The Cloud: Amazon Web Services Hits $14 Billion Annual Revenue Run Rate]

AWS, with an annual run rate approaching $15 billion, will continue to focus on expanding its feature set, Olsavsky told financial analysts on the earnings call.

After a year in which Amazon introduced more than 1,000 new cloud features and services, the "innovation pace continues to accelerate," he said.

Olsavsky said Amazon is particularly proud of two new products launched in the quarter: Amazon Connect, a contact center solution; and Chime, a new collaboration service.

Olsavsky also noted the large customers with whom AWS either struck up or expanded relationships in recent months, naming Liberty Mutual insurance, Snap and Live Nation.

For the first quarter Amazon overall brought in $35.71 billion in revenue and beat Wall Street expectations with earnings of $1.48 per share—analysts had expected $1.12 earnings-per-share for the quarter ending on March 31.

Those numbers, coupled with 23 percent growth, sent Amazon stock soaring. Shares were trading after-hours at more than 9 percent above the market's closing price of $918.38.


Olsavsky, when asked in a Q&A session after the earnings call, couldn’t provide usage growth numbers for AWS.

He did note the AWS Database Migration Service launched last year has now been used by customers to migrate more than 23,000 databases.

Darin Manney, Amazon's head of investor relations, told investors that the company enjoys seeing the deferred revenue increasingly generated as customers gain comfort booking Reserved Instances—long-term contracts for sustained usage discounts on AWS.

"We like that model, customers certainly like that model," Manney said.

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