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AWS Rakes in Nearly $3 Billion in Q2 Earnings

Amazon.com's cloud business recorded another period of impressive growth in the company's second-quarter earnings report, released Thursday.

Amazon Web Services Inc. (AWS), already the market leader in the public cloud space, continued its ascent during the quarter-ended June 30, earning $2.9 billion in revenue. That's 12% higher than the previous quarter, and up 58% from the year-ago period.

Operating income for the unit was $718 million, more than double the amount from the same period last year. Operating margin was 30%.

This actually marks the smallest year-over-year revenue jump for AWS since Amazon.com began breaking out its cloud earnings more than a year ago. The largest period of year-over-year growth for AWS was Q2 of 2015, which posted a massive increase of 81%. In each quarter since then, AWS revenue has grown at a slightly slower, though no less impressive, pace.

The slowdown in year-over-year growth notwithstanding, AWS' numbers are nothing to scoff at. Earlier this year, Amazon.com CEO Jeff Bezos noted that AWS is on track to achieving a $10 billion run rate in 2016. Based on Thursday's earnings, the 10-year-old cloud platform is well on its way to surpassing that mark.

For comparison, AWS' closest cloud competitor, Microsoft, said in its own earnings report last week that its cloud business has a run rate of $12.1 billion. However, that figure combines all of Microsoft's commercial cloud products such as the Office 365 productivity suite in addition to its Azure platform, which competes directly with AWS.

AWS once again outpaced the growth in Amazon.com's two other business units, which make up 90% of the company's total revenues. The North America e-commerce business raked in $17.7 billion in revenue, while the International e-commerce unit took in $9.8 billion.

In its earnings announcement, Amazon.com pointed the spotlight on several AWS developments as contributors to its growth. Among them are the launches earlier this year of the Elastic File System and the X1 instance type.

Another big driver of Amazon.com's growth this quarter was its recent Prime Day sale, which relied heavily on the AWS platform to support the massive increase in customer transactions -- over 60% more than last year's Prime Day, according to the company.

Overall, Amazon.com just beat Wall Street's expectations, generating $30.4 billion in total revenue (compared to analyst estimates of $29.6 billion) and earnings per share of $1.78 (compared to estimates of $1.11).

About the Author

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

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