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AWS Tops Earnings Estimates in Third Quarter

Amazon.com reported its third quarter earnings on Thursday and, as expected, its massive cloud business was the standout performer.

Amazon Web Services (AWS) just beat Wall Street estimates for the period, raking in about $4.6 billion in revenue. That's up by 42% year over year, and by nearly 12% from the previous quarter, when it earned $4.1 billion.

Operating income for the quarter-ended Sept. 30 was also higher than expected at $1.2 billion, up by 38% year over year.

AWS was once again its parent company's fastest-growing business, outpacing the year-over-year growth of the North America (35%) and International (29%) retail units. AWS comprised 11% of Amazon.com's total earnings for Q3.

Following the pattern of recent earnings reports, however, growth for AWS appears to be decelerating. Despite notching record-high revenue, this most recent period is essentially tied with the previous one for the platform's slowest year-over-year growth rate since Q2 of fiscal 2015, when revenue ballooned by 81 percent:

Reporting Period AWS Revenue (Billions) Year-over-Year Revenue Growth (%)
Q3 of 2017 $4.6 42
Q2 of 2017 $4.1 42
Q1 of 2017 $3.7 43
Q4 of 2016 $3.5 47
Q3 of 2016 $3.2 55
Q2 of 2016 $2.9 58
Q1 of 2016 $2.6 64
Q4 of 2015 $2.4 69
Q3 of 2015 $2.1 78
Q2 of 2015 $1.8 81
Q1 of 2015 * $1.6 49
* First time reported as a separate line item.

Meanwhile, cloud rival Microsoft reported a 90% year-over-year growth for its Azure cloud platform in its own earnings report on Thursday.

Nevertheless, AWS' run rate of $18 billion is nothing to sniff at. Executives pointed to several milestones over the past quarter as drivers of its growth, including:

Overall, Amazon.com beat estimates with $43.7 billion in revenue for the quarter, up 34% year over year. That revenue total includes $1.3 billion from Whole Foods, which Amazon.com acquired this summer.

About the Author

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

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