Wall Street didn't get the email that it was supposed to punish Amazon if its cloud business turned out to be too successful.
Amazon.com Inc. (Nasdaq: AMZN) divulged the financial performance for AWS, the world's biggest cloud platform by far, for the first time on its earnings call Thursday. Sales were $1.566 billion, up 49% from $1.050 year-over-year. Expenses were $1.301 billion, up from $805 million, for $265 million income, up 8% from $245 million. Annual run rate is $5 billion, the company said in a statement. (See Amazon.com Announces Q1 Sales Up 15% to $22.72 Billion.)
"Amazon Web Services is a $5 billion business and still growing fast -- in fact it's accelerating," Jeff Bezos, founder and chief executive of Amazon.com, said in a statement.
Previous to the earnings report, analysts said Amazon needed to show a loss for AWS, lest strong results in AWS make Amazon's mainstay retail business look weak, which would cause Amazon's stock to drop. AWS accounts for 7% of Amazon revenue. (See Amazon Earnings: What to Watch For.)
That didn't happen. Amazon's stock traded at $415.5 up 6.54% in after-hours training.
Overall, net sales increased 15% to $22.72 billion in the first quarter, compared with $19.74 billion a year ago. Amazon was hurt by $1.3 billion unfavorable impact from year-over-year changes in foreign exchange rates -- excluding that, net sales increased 22% year-over-year.
Operating income was up 74% to $255 million, compared with $146 million in the year-ago quarter.
Net loss was $57 million in the first quarter, or $0.12 per diluted share, compared with net income of $108 million or $0.23 per diluted share in the first quarter of 2014.
Amazon beat expectations slightly -- analysts expected Amazon to lose $0.13 per share, on revenue of $22.39 billion.
For the second quarter, Amazon expects net sales between $20.6 billion and $22.8 billion, up 7% to 18% year-over-year, with an operating loss of $500 million to a gain of $50 million, compared with a $15 million loss a year ago.