Amazon.com’s fast-growing cloud business is generating a ton of cash and helping the Seattle company turn an overall profit.
Amazon today revealed how much revenue and profit its Amazon Web Services business is generating in its second quarter earnings report. The company reeled in $1.8 billion during the past three months from AWS, which is up from the $1.6 billion it made in revenue for the prior three months, and up from the $1 billion it made in the year-ago quarter — that’s an 81 percent spike year-over-year.
Perhaps even more importantly, AWS pulled in $391 million in operating income last quarter, up from $265 million in the previous quarter and up from $77 million last year — a massive 407 percent increase.
The $1.8 billion in revenue accounted for 8 percent of Amazon’s $23.18 billion in total revenue from last quarter, as the company beat Wall Street’s expectations with a profit of $92 million. Shares were up 17 percent in after-hours trading.
AWS, which offers cloud computing and storage services to more than one million customers like Netflix and Airbnb, is a key reason for Amazon’s rare profitability this quarter.
Amazon first revealed AWS financials in its first quarter earnings report three months ago, when Amazon CEO Jeff Bezos called AWS a $5 billion business.
Through the first half of 2015, AWS has already made $3.4 billion for the company.
“Born a decade ago, AWS is a good example of how we approach ideas and risk-taking at Amazon,” Bezos said in a statement in April. “We strive to focus relentlessly on the customer, innovate rapidly, and drive operational excellence. We manage by two seemingly contradictory traits: impatience to deliver faster and a willingness to think long term. We are so grateful to our AWS customers and remain dedicated to inventing on their behalf.”
On the company’s earnings call today, CFO Brian Olsavsky said Amazon is “thrilled” with AWS and noted that usage growth is outpacing revenue growth. Amazon has cut the price of AWS 49 times since launching the service in 2006 while adding 350 “significant” new features this year.
“Innovation is accelerating, not decelerating,” Olsavsky said.
AWS competes with other cloud services from tech giants like Microsoft, Google, and IBM, but those companies do not specify exact financials from their cloud services in earnings reports. Microsoft offers a broader mix of technologies overall, including Office 365 and software for hosted and on-premises servers, so a direct comparison is difficult, but Microsoft’s Commercial Cloud revenue has reached an annualized run rate of $8 billion, according to the company.
AWS is available in 11 regions worldwide and will soon expand to India next year. Olsavsky noted that AWS is capital-intensive, but called it a “very good business for us.”
“We are in this for the long haul,” Olsavsky said of AWS on Thursday’s earnings call. “We are looking for a return on capital, free cash flow, and happy customers in this space.”