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Amazon first-quarter results value Amazon Web Services at $5bn

Amazon's Q1 results confirm Amazon Web Services – AWS – as its most profitable business, valuing the cloud services provider at $5bn

Caroline Donnelly
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Published: 24 Apr 2015 11:30

Amazon Web Services (AWS) is worth $5bn and comprises the most profitable part of Amazon.com with a 17% margin, according to the e-commerce company’s first-quarter results.

Amazon.com's founder and CEO Jeff Bezos said AWS was still growing fast, nearly a decade after its formation.

The results revealed AWS generated revenue of $1.57bn in the three months to 31 March 2015, up from $1.05bn in the same period in 2014.

“Amazon Web Services is a $5bn business and still growing fast – in fact it’s accelerating,” said Bezos.

The Q1 results mark the first time Amazon.com has outlined details about the individual financial contribution its cloud business makes to Amazon's overall operations.

Previously, AWS’s performance was lumped in with other parts of Amazon.com’s business activities, making it difficult for analysts and industry watchers to understand how it was faring.

“Born a decade ago, AWS is a good example of how we approach ideas and risk-taking at Amazon. We strive to focus relentlessly on the customer, innovate rapidly and drive operational excellence,” added Bezos.

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Innovation remains ahead for AWS

“We manage by two seemingly contradictory traits: impatience to deliver faster and a willingness to think long-term.

“We are so grateful to our AWS customers and remain dedicated to inventing on their behalf.”

Amazon first announced its intention to separate out the performance of AWS in January 2015. The move seems to have paid off, with the firm’s share price rocketing 6% yesterday (23 April 2015) in after-hours trading.

On a conference call to discuss the results yesterday, Brian Olsavsky, vice-president and chief financial officer of Global Consumer Business at Amazon.com, was keen to stress the firm is taking nothing for granted with AWS.

“From our perspective it’s a business that’s still really in day one. There is a lot of innovation in front of us,” he said.

Amazon's overall performance takes a dive

The AWS portion stood in contrast with Amazon.com’s Q1 performance results as the firm posted a $57m net loss, compared with a profit of $108m during the same quarter the year before. However, net sales were up 15% on 2014, at $22.72bn.

Despite the Q1 loss, Richard Holway, chairman of IT analyst house TechMarketView, said the firm is investing heavily in e-commerce initiatives, which could pay off for the firm later down the line.

“To give Jeff Bezos his due, he does start lots of hares running and, unlike Google, many make it big time, as the Kindle shows only too well and, indeed, AWS being but the latest example,” said.

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