Amazon’s Q4 Cloud Revenue Grew Nearly 50 Percent YoY
Amazon (AMZN) released its financial results for the fourth quarter in 2016, where its cloud division Amazon Web Services (AWS) reached $3.53 billion in revenue, up 45.8 percent year over year, coming in shy of analysts’ expectations of $3.6 billion.
In the quarter ended December, AWS cloud operating income rose 60 percent to $926 million. Amazon shares were down four percent in after-hours trading.
In Q4 2016, AWS maintained a 40 percent share of the public cloud services market which as a whole has reached over $7 billion in quarterly revenue, according to Synergy Research.
In a call with investors on Thursday, Amazon CFO Brian T. Olsavsky said that the cloud business is continuing to see positive momentum across all customer segments.
“I feel we've got a very broad base of customers from startups to small-medium businesses to large enterprises to the public sector. And we're continuing to see strong growth across all those sectors. The business is now a $14 billion annualized – running at a $14 billion run rate,” Olsavsky said, quoted in a Seeking Alpha transcript of the call.
Darin Manney, head of investor relations at Amazon added: “On the customer split, we serve – in AWS, we serve millions of active customers along the spectrum of large enterprise companies as well as small startups and the public company – or public environment as well. The multitude of launches that we had in reinvent was great for all sizes of customers, really, both large and small; both companies starting – just getting their start with AWS, but also companies that have been engaged with AWS for many years.”
Despite customer demand for AWS, cloud price cuts could weigh on its profitability moving forward, a report by Seeking Alpha suggests.
Olsavsky told investors Thursday that AWS had seven price cuts in Q4, timed for Dec. 1, 2016, “so about 1/3 of the impact was seen in Q4.”
“But that's going to be constant in this business. We've been pretty clear that this business is all about creating new functionality for customers, giving price cuts and then working on the operating efficiencies. So, very pleased with Q4 and the pace of the business,” he said.
Amazon started breaking out its cloud revenues in Q1 2015.
