Amazon Web Services Business Generates Sales of $1.57bn in Q1
Online retailer and cloud services provider Amazon said that its web services business has generated sales of $1.57bn in the first quarter of the year.
Amazon Web Services (AWS) is a cloud computing platform that generates money by charging businesses to host websites and other applications. According to Amazon founder Jeff Bezos, AWS is a $5bn business and growing fast.
Total revenues of the firm for the quarter have increased by 15% to $22.7bn. According to the company, the rise was stronger than anticipated and the firm’s share climbed about 5% in after-hours trading. The AWS division offers cloud computing services to household names involving Dropbox, Spotify, Netflix, Uber, Samsung and even the CIA.
For the first time, the figures confirm that cloud business of Amazon is the biggest of its kind in terms of revenue. One of the analysts was surprised at the scale of the margins enjoyed by Amazon Web Services.
There is a possibility that the profitability of the cloud business might soothe investors, who have been concerned for the firm to turn a profit and stop investing in new projects. Dan Kurnos, an analyst at the Benchmark Company, said that AWS was amazingly more profitable than anticipated.
“That should help [Amazon] justify their heavy investment spending and provide a clearer path to profitability for the [overall] company as AWS grows”, said Kurnos.
According to Michael Pachter, from Wedbush Securities, it has been believed that the business AWS was breakeven at best and it is really unexpected that it generates such a significant portion of profit. Pachter said that the stock is up, as it is clear that the company can be hugely profitable.