AWS Revenue Soars 42% To Reach $4.10 Billion

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Amazon finally revealed its earnings today, and AWS was the main highlight this quarter, once again, as the cloud platform saw a 42% jump in revenue, which reached the highs of $4.10 billion.

It also gave the company $916 million in operating income this quarter.

Were it not for AWS, Amazon would be losing a lot of money right now, even as revenue growth for the company’s cloud business segment, on a year over year basis, has now declined for eight consecutive quarters.

What’s more, AWS reported sequential revenue growth of just 4% in the first quarter, falling well below the prior two-year average of 12%.

But the big news for the cloud industry is that Amazon Web Services continues to drive it.

Amazon’s cloud division reported a notable uptick from the $2.9 billion it had brought in for the second quarter a year ago. Back then, operating income had come in at $718 million. And while this decline in profits was a surprise overall, it is in line with what some analysts expected from AWS this quarter.

A major part of the reason is that operating expense increased quite a bit faster than overall revenue, as AWS upped investments in equipment and people during the quarter.

The cloud leader’s operating expenses of $3.2 billon is up 46% compared to last year.

In fact, Amazon Chief Financial Officer Brian Olsavsky alluded to this in the conference call with reporters following the release of the results, noting that the company sharply increased the amount of capital leases it took on during the quarter — the majority of which went towards investment in AWS.

Amazon Web Services had also posted a 42% increase in revenue in the first quarter of 2017, and Olsavsky made it a point to note that AWS revenue is now on a $16 billion annual run rate, compared to the $14 billion run rate last quarter.

Nevertheless, Amazon stock was down slightly after hours on the earnings miss.

Wall Street had expected $1.01 billion in operating income from the cloud giant, on revenue of $4.08 billion, implying a 41% growth in revenue growth year over year.

Then again, no one ever said the cloud business was going to be easy.

Not with competitors like Microsoft, Google, IBM and Alibaba.