Amazon Web Services continues to drive the cloud computing industry. The cloud division of Amazon reported a 42 percent increase in revenue compared to the previous year, although profits were flat.
Revenue for the second quarter was $4.1 billion, up from $2.9 billion in the year ago quarter. Operating income was $916 million, compared to $718 million in the second quarter last year. While Amazon overall surprised investors with a drop in profits, this is pretty much what observers expected from AWS during the quarter.
Operating expenses increased a little faster than overall revenue, a sign that AWS invested a little heavier in equipment, people, or both during the quarter. The company reported operating expenses of $3.2 billion, up 46 percent compared to last year.
On a conference call with reporters following the release of the results, Amazon Chief Financial Officer Brian Olsavsky said that Amazon sharply increased the amount of capital leases it took on during the quarter, the majority of which went toward investment in AWS. “We’re seeing accelerating usage growth in many of our large services with customers.”
Microsoft, the nearest competitor to AWS, doesn’t break out revenue for its Azure service but said Azure revenue grew 97 percent its last fiscal quarter. That means the overall cloud market continues to soar, consider the number one and number two players in the market are enjoying this kind of growth. AWS also posted a 42 percent increase in revenue in the first quarter of 2017.
But Olsavsky made sure to note that AWS revenue is now on a $16 billion annual run rate, compared to a $14 billion run rate last quarter. Microsoft’s entire cloud business – which includes Azure, Office 365, Dynamics 365, and a few other things – hit a $18.9 billion run rate during its last quarter.