Amazon AWS Reports $2.6B Quarterly Revenue, Up a Colossal 64%

The dominant cloud vendor says it's on track for $10 billion annual run rate.

Mitch Wagner, Executive Editor, Light Reading

April 28, 2016

3 Min Read
Amazon AWS Reports $2.6B Quarterly Revenue, Up a Colossal 64%

Amazon Web Services is on track for a $10 billion run rate, clocking in Thursday with $2.6 billion quarterly revenue, up 64% year-over-year and $8.9 billion trailing 12 months of sales.

In other words, AWS is growing faster than a Happy Deals Giant Inflatable Pickle ($5.25 on Amazon). Inc. (Nasdaq: AMZN) is also "very pleased" with a broad, 23.5% operating margin, nearly double the 12.4% year-ago margin, CFO Brian Olsavsky said on the Amazon quarterly earnings call Thursday. He cautioned, however, that the margin is likely to fluctuate significantly quarter to quarter. "Margins will be very bumpy and based on levels of investment, price reduction, and operating efficiency," Olsavsky said.

Figure 1: AWS Results Source: Amazon Source: Amazon

AWS is now in 33 availability zones in 12 geographic regions, with 11 more availability zones to come in the next year, and additional capital investments as well. The largest increase in capital will support incremental increased usage for current customers.

Cloud is helping drive growth for Amazon and other vendors this quarter. Microsoft Corp. (Nasdaq: MSFT)'s "intelligent cloud" business, which includes Azure and its traditional service products, grew 3.3%, to $6.1 billion. (See Microsoft: Cloud Growth Fails to Offset Overall Revenue Decline.)

Microsoft's cloud business is barely growing at all compared with Amazon's. But it's growing.

At IBM, cloud is one of several high-growth business lines, although overall revenue for the company has declined 16 straight quarters. (See Cloud Pays for IBM, But Not Enough for Wall Street.)

VMware is also looking at cloud driving revenue up as its core business slumps. (See Cloud Helps Drive VMware Revenue Higher.)

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And Apple's cloud businesses shone as the rest of its business declined -- the first quarterly revenue decrease in 13 years. (See Apple: Cloud Shines Light in Financial Gloom.)

Unlike those other companies, Amazon's core business is doing fine. Sales for the quarter were $29.13 billion, up 28% from a year ago, beating Amazon's own expectations. And the profit was $513 million, or $1.07 per share, compared with a year-ago loss of $57 million, or 12 cents per share. It seems Amazon sells a lot of Happy Deals Giant Inflatable Pickles.

Amazon stock soared in after-hours trading, up 12.48% to $677.11.

Figure 2: Amazon Net Sales (Overall) Source: Amazon Source: Amazon

Figure 3: Amazon Net Income (Overall) Source: Amazon Source: Amazon

Amazon is continuing its dominance of the cloud market, with even big players like Microsoft, Google and IBM struggling to keep up with Amazon's market share. This quarter's results will make it difficult for the insurgents to narrow Amazon's lead.

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, West Coast Bureau Chief, Light Reading.

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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