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AWS Brightens Lackluster Q4 for Amazon

Amazon.com reported its fourth-quarter earnings on Thursday, and while the retail giant may have missed Wall Street estimates, its cloud business continues to boom.

Amazon Web Services Inc. (AWS) garnered $2.4 billion in revenue for the quarter-ended Dec. 31, marking a 69% increase year-over-year. This follows the 78% year-over-year increase reported in Q3, when AWS earned $2.1 billion in revenue.

Profitability also continues to grow for AWS, which recorded operating income of $687 million in Q4, a 186% year-over-year increase and a 31% increase from Q3's operating income of $521 million.

AWS operating margin was 28.5% for Q4, up from 25% in Q3.

While AWS is Amazon.com's least lucrative business -- the North America and International retail segments combine for 95% of Amazon.com's total revenue -- it remains the company's fastest-growing. In its earnings announcement, Amazon.com singled out several new AWS features and services as contributors to its growth, including its new Internet of Things platform, the launch of its enterprise e-mail service and the debut of a security certificate service just this week.

According to the company, AWS rolled out over 720 new features in 2015 -- a 40% increase compared to what it added in 2014.

While Thursday's earnings were positive for AWS, they were less so for Amazon.com overall. The company reported a 22% year-over-year increase in Q4 revenue of $35.7 billion, but missed analyst expectations of $36 billion. Earnings per share for the quarter was $1, compared to analyst expectations of $1.55.

Operating income came in at $1.1 billion in Q4, up 88% year-over-year. Net income was $482 million.

About the Author

Gladys Rama is the senior site producer for Redmondmag.com, RCPmag.com and MCPmag.com.

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