Amazon breaks out AWS figures in Q1 results, and it turns out cloud services are highly profitable
Just how much money does Amazon.com Inc. make from its Amazon Web Services (AWS) division?
The answer to that question was finally delivered Thursday when Amazon broke out numbers for AWS for the first time in its quarterly financials, and the great news: it turns out cloud services are highly profitable.
According to the numbers, AWS generated revenue of $1.57 billion in Q1, up from $1.1 billion for the same quarter of 2014. Profit for the division came in at $265 million for the first quarter, assisting Amazon in offsetting losses in other divisions.
The operating margin for the first quarter came in at 17 percent, down from 23 percent for the same quarter in 2014, due to a 62 percent increase in operating expenses.
For the calendar year 2014, Amazon disclosed that the division had grown 49 percent year-on-year to $4.6 billion in revenue.
Founder and Chief Executive Officer Jeff Bezos called AWS a $5 billion business, but presuming no contraction of revenue over Q1 for the rest of the year, it’s closer to a $6.25 billion business, and that’s not allowing for the likely quarter on quarter growth AWS is likely to experience in the months ahead.
“Born a decade ago, AWS is a good example of how we approach ideas and risk-taking at Amazon,” Bezos said. “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.”
Just how big, or how much revenue AWS delivered Amazon has long been the source of speculation by investors, and the broader market alike. For years it was suggested that the business may have been a loss maker for the e-commerce giant, an extravagance that some investors suggested that Amazon should not be pursuing as it is fundamentally different (at least on the surface) to the rest of the business.
These figures would suggest that the naysayers were wrong.
No doubt some shareholders will call for the for the division to be spun off, but it’s important to keep in mind that without the handsome profit AWS is making, Amazon’s overall loss of $57 million for the quarter would have been significantly higher.
photo credit: AWS the Start-up Project via photopin (license)
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