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Amazon CFO: AWS Sees Rapid Growth Due To 'Pace Of Innovation'

The cloud leader saw its growth rate expand in Q2 for the third consecutive quarter, the result of customers adopting a record-breaking number of innovative services and features

Amazon Web Services accelerated its growth rate for the third straight quarter by developing innovative capabilities at breakneck speed that attracted new customers to its industry leading cloud and encouraged existing ones to expand usage.

"Why do people come to us?" Amazon CFO Brian Olsavsky asked Thursday on a Q2 earnings call. "It's that functionality and pace of innovation we've demonstrated for multiple years."

So far in 2018, AWS introduced more than 800 features and services—on pace to break the product development record it set a year earlier when it debuted more than 1,400.

[Related: Bezos: 'Unusual Advantage' Paying Off As AWS Stuns Wall Street With 49 Percent Sales Growth In Q1]

The expanding portfolio of AWS capabilities, combined "with a strong partner and customer ecosystem" and industry-leading performance is driving usage adoption that's even surpassing revenue growth, Olsavsky told investors.

New AWS features are so popular, he said, because they're developed with feedback from customers.

While its cloud scaled to accommodate a surging number of users and workloads, AWS managed to keep its spending on capital leases flat for Q2, due in part to engineering efforts that delivered greater data center efficiency, Olsavsky said.

"We're very happy with the results we're seeing, and the backlog AWS sees, and new customers and new contracts and expansion of existing customer business we see," Olsavsky said.

Database hosting has become an important driver of AWS adoption, with more than 80,000 migrations having been completed using the AWS Database Migration Service, he told investors.

In addition to data and analytics services, customers are branching out into state-of-the-art technologies like machine learning, artificial intelligence and serverless computing, Olsavsky said.

Amazon reported $6.11 billion in AWS revenue for the second quarter that ended June 30—a 49 percent year-over-year growth rate. Those results surpassed the $6.01 billion that Wall Street expected from the cloud leader, according to a consensus of analysts surveyed by research firm FactSet.

Profitability was another bright spot as the cloud division generated $1.64 billion in operating income for Seattle-based Amazon during the quarter, compared to $916 million during the same period of 2017.

Overall, Amazon reported a 39 percent revenue increase in Q2 to $52.89 billion.

Total operating income reached $2.98 billion, up from $628 million the year before, while Amazon reported earnings of $5.07 of per diluted share, compared to 40 cents per diluted share year-over-year

Those results sent Amazon stock up more than 3 percent to $1,866.95 at publication time in after-hours trading.

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