AWS floats Amazon’s financials

Jeff Bezos, Amazon
Jeff Bezos, Amazon. Image: Amazon

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28 July 2017 | 0

Amazon Web Services (AWS) is driving growth for its parent company, Amazon, as reflected in its second quarter financials for 2017.

The global tech giant fell short on earnings, bringing in earnings per share (EPS) of $0.40 per share as compared to $1.42 per share expected, according to CNBC.

Its revenue was $38 billion, up from the $30.4 billion in sales it brought in during the second quarter last year.

But Amazon’s “otherwise lacklustre” performance was boosted by AWS, as it delivered its strongest absolute dollar growth, both sequentially and year-to-year, surging to a more than $16 billion annualised run rate with $4.1 billion in Q2 2017 revenue, according to Technology Business Research (TBR).

A report by Business Insider showed that the company’s sales were supported by results from its services business, specifically its AWS cloud computing business.

Compared to the same time last year, AWS’ revenue was up 42% and Amazon’s overall service revenues rose 42% to $13.2 billion.

TBR analyst, Meaghan McGrath, said accelerated AWS usage has balanced broader Amazon underachievement with growth that provokes expedited capacity expansion.

She mentioned that AWS delivered “solid performance”, noting the 42% year-on-year revenue growth was supported by usage of the largest AWS services.

“[It] is growing at a faster pace than revenue, and accelerating, which further prompts global capacity expansion,” she said.

But, McGrath said its rapid geographic expansion has hindered AWS’ operating margin, which dropped 260 basis points from the second quarter of 2016 to 22.3% in the quarter.

“While revenue growth will continue, so will global infrastructure expansion to meet customer demand, and margins will continue to be pressured. Despite this margin pressure, AWS will remain a critical component to Amazon’s corporate performance, driving both revenue growth and ongoing profitability,” she added.

In the third quarter of 2017, Amazon expects to post revenue of between $39.25 billion and $41.75 billion.

As for its operating results, it expects it to range from an operating loss of $400 million to an operating profit of $300 million.

“Third quarter certainly has a healthy amount of investments and we’ll continue to grow those areas,” Amazon chief financial officer, Brian Olsavsky, said during a press call.

Most recently, Amazon founder, Jeff Bezos, briefly became the world’s richest man, according to Bloomberg, when the company’s share price surged ahead of its quarterly results. When this occurred, Bezos was worth $92.3 billion, surpassing Bill Gates’ $90.8 billion valuation. But within hours, his worth slipped to $89.3 billion, putting him behind Gates.

IDG News Service

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