Amid COVID-19 Pandemic, AWS Surpasses $40 Billion Run Rate
While usage trends have been dramatically affected by the COVID-19 crisis, AWS is ‘well-positioned’ to not see an adverse impact from unprecedented economic volatility because of the breadth of its customer base, says Amazon CFO.
Amazon’s cloud division surpassed a $40 billion run rate in the first quarter of 2020, with growth driven by large online services providers ramping their spend amid a global pandemic even while other customers rapidly scaled down.
The global COVID-19 crisis has dramatically impacted Amazon Web Services usage patterns, Amazon CFO Brian Olsavsky told investors in an earnings call Thursday. But AWS is well-positioned to navigate the unpredictable and volatile business climate because of the breadth of its customers, from startups to enterprises to the public sector.
“We’ve continued to see a healthy adoption of our [AWS] business, and healthy usage not only in the United States, but globally,” Olsavsky said.
With the enormous variance in the pandemic’s economic impact across industries, some AWS customers are massively scaling usage—most notably those that have built video conferencing, gaming, remote learning and entertainment products on the AWS platform.
Their increased spend has more than compensated for unprecedented declines from other large customers, particularly in the travel and hospitality sectors, he said.
It’s a “mixed bag” that for the foreseeable future “will be tied to general economic conditions in the country and the world,” Olsavsky said.
But the basic value proposition that AWS has always highlighted still holds true: “the most functionality and most vibrant community of customers and partners,” he said, as well as “proven operational and security experience.”
AWS has focused on doing a good job, he said, in being able to scale up for customers when they need it.
And the COVID crisis has not slowed the process of building out the platform’s machine learning and artificial intelligence capabilities that customers also need, Olsavsky said.
Amazon’s cloud division achieved $10.22 billion in revenue on 33 percent year-over-year growth—just a notch below the $10.33 billion estimated by FactSet.
Amazon as a whole delivered $75.5 billion in revenue in the quarter that ended March 31. That amounted to earnings-per-share of $5.01—short of the $6.25 expected by Wall Street.
On the earnings miss, Amazon stock, which closed at $2,474.00 Thursday, fell in after-hours trading to $2,351.01 at the time of this publication.
The company announced before its earnings call that the $4 billion in profit expected for the second quarter will be entirely invested in responding to the coronavirus crisis, including for comprehensive testing of workers and bulking up a delivery network that the world increasingly relies on to provide vital consumer goods.