AWS Beats Street Estimates Despite JEDI Setback

Despite taking some hits this past quarter -- primarily in the form of losing the coveted JEDI government cloud contract to rival Microsoft Azure -- Amazon Web Services (AWS) has exceeded Wall Street expectations in its most recent financial quarter.

Parent company Amazon reported its fourth quarter earnings on Thursday. AWS drew $9.95 billion in revenues for the quarter ended Dec. 31, up 34% year over year and a nearly 11% increase from the previous quarter. Analysts had been projecting revenues of $9.81 billion for the cloud unit.

Operating income for the quarter was $2.6 billion, roughly 67% of Amazon's total.

For the full fiscal 2019, AWS revenues topped $35 billion, a 37% increase over fiscal 2018.

AWS remains Amazon's fastest-growing business unit despite decelerating growth. Since the 46% year-over-year increase of Q4 2018, the cloud unit has gradually slowed its revenue climb; this quarter's 34% year-over-year increase is its smallest since Amazon began reporting AWS earnings separately.

For comparison, Azure, AWS' closest competitor, recorded a year-over-year revenue increase of 62% in Microsoft's most recent financial report, issued Wednesday. Microsoft doesn't disclose Azure revenues in precise dollar amounts, but the company's Commercial Cloud unit, of which Azure is part, had revenues of $12.5 billion in the quarter, a 39% year-over-year jump.

Notably, Amazon has been in a legal tie-up with Microsoft over a 10-year, $10 billion cloud contract with the U.S. Department of Defense dubbed the Joint Enterprise Defense Infrastructure, or JEDI. The contract was awarded to Microsoft last fall, despite AWS' much more dominant cloud market share. Amazon has since filed a formal protest and is working to delay the implementation of the contract.

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.


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