Amazon Web Services generated a record-breaking 9.9 percent of its parent company’s net sales for the quarter ended Sept. 30, generating $3.23 billion in net sales, up 55 percent year over year. AWS generated record profits, too, with quarterly operating income of $861 million, up sharply from $521 million in third-quarter 2015.
Amazon.com as a whole reported $32.7 billion in total net sales and net income of $252 million, or $.52 per diluted share. That profit fell well below analysts’ averaged EPS expectations of $.78 on revenue of $32.69 billion. Over past four quarters, revenue for AWS has totaled $11.1 billion.
In a call with reporters after the release of earnings, Amazon CFO Brian Olsavsky attributed AWS’s growth to “continued strength with customers we have and attracting new customers as well. It was the biggest year-over-year and sequential increase in revenue we’ve seen, and I’m very pleased with that business and the team behind it. We know customers are choosing us for our skill set, our ecosystem and our total value package, which includes price decreases and expanding to their regions in their countries.”
He said AWS already this year has added more 722 new features, its total for all of last year.
AWS has tended to account for an increasingly large percentage of Amazon’s net sales, nearly doubling last quarter from the 4.8 percent it represented less than two years ago.
Recently, VMware and AWS announced a new hybrid cloud service, VMware Cloud on AWS, that enables customers to use their existing VMware software and tools to leverage AWS’s global footprint and breadth of services, including storage, databases, analytics, and more. This offering will be the primary public cloud service sold and supported by VMware, and AWS will be VMware’s primary public cloud partner.
And AWS recently announced the option for customers to bring their own encryption keys with AWS Key Management Service. This new feature lets customers import keys from any key management and Hardware Security Module product and use them with AWS services and their own applications.