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Amazon's Cloud Division Reports 32% Revenue Growth

Source: CNBC
  • Amazon Web Services revenue growth accelerated in the first quarter even as the segment leads the cloud infrastructure market.
  • In the quarter Amazon said its cloud chief, Andy Jassy, would replace Jeff Bezos as head of all of Amazon.

Amazon said Thursday that its market-leading cloud business grew revenue 32% in the first quarter, a faster pace than analysts had expected and accelerating from 28% growth in the fourth quarter.

The Amazon Web Services division is critical to Amazon's expansion plans, thanks to its profitability. It appeared in 2006, before rivals such as Microsoft Azure and Google Cloud Platform, and today it has become a force in information technology as a top global software provider, exceeding the likes of Oracle and SAP.

The AWS unit delivered $13.50 billion in revenue, more than the $13.23 billion consensus estimate among analysts polled by FactSet. That was 12% of Amazon's total revenue.

AWS has come to play a crucial role at Amazon as its most reliable source of income. In the first quarter AWS contributed $4.16 billion in operating income, above the $3.87 billion FactSet consensus estimate and nearly 47% of Amazon's overall operating income. The operating margin widened to 30.8% from 28% in the prior quarter.

"We have firm confidence that we offer a lot of advantages to AWS customers, from functionality to a vibrant and robust partner ecosystem," Brian Olsavsky, Amazon's finance chief, said on a conference call with analysts. "And then really we also have less downtime and better security, which I think is super important to all of our customers, especially security nowadays."

In the quarter Amazon said that the head of AWS, Andy Jassy, would replace Jeff Bezos as Amazon's CEO, and that former AWS executive Adam Selipsky would leave his position as head of Salesforce's Tableau business to run AWS. AWS introduced new computing instances that rely on its latest generation of energy-efficient Arm-based Graviton chips.

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