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With Q1 Earnings, AWS Shows It's Back on Track

Amazon Web Services (AWS) surpassed Wall Street expectations for the quarter ended March 31, according to parent company Amazon.com's most recent earnings report released Thursday.

The cloud giant brought revenues of $5.4 billion in its parent company's fiscal first quarter, compared to analyst estimates of $5.2 billion. Revenue is up 6% from the previous quarter and 49% compared to Q1 of 2017, when it drew $3.7 billion.

That year-over-year increase is AWS' largest since Q3 of 2016, and hints at a return to accelerating growth that began in Q4 of 2017 (see table). Prior to that period, AWS' growth had been showing signs of slowing down as rival Microsoft increasingly chipped away at its market share.

Reporting Period AWS Revenue (Billions) Year-over-Year Revenue Growth (%)
Q1 of 2018 $5.4 49
Q4 of 2017 $5.1 45
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.

Thursday's Q1 results signal a return to form for AWS that Amazon.com CEO Jeff Bezos attributed to the unit's more entrenched position in the market compared to its competitors.

"AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down," Bezos said. "As a result, the AWS services are by far the most evolved and most functionality-rich. AWS lets developers do more and be nimbler, and it continues to get even better every day. That's why you're seeing this remarkable acceleration in AWS growth, now for two quarters in a row."

AWS' robust year-over-year growth also outpaced those of Amazon.com's other business units; the North America retail segment grew 46%, while the International segment grew by 34%.

AWS' operating income was $1.4 billion for the quarter, a 57% year-over-year increase.

Microsoft, whose Azure cloud platform is considered AWS' closest competitor, also reported its earnings on Thursday. Though Microsoft did not break out revenues for its various cloud properties, it did claim a 93% year-over-year jump in Azure earnings.

Overall, Amazon.com earned $51 billion in Q1. Its earnings per share of $3.27 well exceeded analyst forecasts of $1.25.

About the Author

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

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