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Cloud Growth Bolsters Amazon's Q1 Earnings

Amazon.com reported positive earnings in its first-quarter financial report on Thursday, with the growth in its cloud business leading the pack.

Amazon Web Services Inc. (AWS) topped Wall Street estimates for the quarter-ended March 31, raking in $2.57 billion in revenue. That's a nearly 64% increase from the year-ago period and 7% higher than the previous quarter.

At this pace, AWS is well on its way to meeting the $10 billion run rate that Amazon.com CEO Jeff Bezos forecasted in a letter to shareholders earlier this month.

Operating income for AWS more than tripled year-over-year to $604 million in Q1, although that's down from the previous quarter's $687 million. Operating margin was 28%.

As usual, AWS' year-over-year revenue growth vastly outpaced that of Amazon.com's other e-commerce units, which make up the majority of the company's earnings. The North America segment generated $17 billion in revenue with 27% year-over-year growth, and the International unit earned $9.57 billion with 24% year-over-year growth.

Overall, Amazon.com beat analyst expectations. Total revenue for the period grew by 28.2% year-over-year to $29.13 billion, compared to estimates of $27.98 billion. Earnings-per-share were $1.07, well above the expected $0.58. Net income was $513 million, up from the year-ago-period's loss of $57 million.

In its earnings statement, Amazon.com singled out several new AWS offerings as contributors to its growth, including the Lumberyard game development service launched in February and the Database Migration Service (DMS) that became generally available in March. Since the launch of DMS, the product has moved an additional 1,000 databases to the AWS cloud, according to the company.

About the Author

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

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