Amazon posted a surprise profit in its Q2 on the back of a blistering quarter for its Amazon Web Services (AWS) public cloud business.
AWS saw revenues mushroom 81 per cent year on year to $1.82bn (£1.17bn) in the three months to 30 June in what was only the second quarter Amazon has broken out its numbers.
Defying concerns over the sustainability of its capital-intensive model, AWS is also turning into a money-making machine for its bookseller parent. In Q2, AWS segment operating income quintupled to £391m, equating to 36 per cent of the total for Amazon.
This helped Amazon defy analyst expectations and post a net profit of $92m for the quarter, compared with a $126m net loss a year earlier. Amazon's total sales rose 20 per cent to $23.18bn.
Some 350 significant new features and services have been added to AWS so far this year, Amazon said.
AWS is not only the largest cloud infrastructure player but also bigger than its four closest competitors – Microsoft, Google, IBM and Salesforce – combined, according to analyst Synergy Research.
Last year, Canalys chief executive Steve Brazier expressed concerns over the public cloud market, warning that profits were hard to come by despite the hundreds of millions of dollars that were being poured into infrastructure. He singled out AWS for the cash-draining effect it was having on Amazon.
Amazon said that trailing 12-month capital expenditures were $4.61bn in Q2.
On a Q2 earnings call, Amazon chief financial officer Brian Olsavsky acknowledged that AWS is a capital-intensive business but claimed it is a "very good business for us".
Forty-nine price cuts have been enacted since launch in 2006, Olsavsky pointed out on the call, a transcript of which can be found here.
"We are in this for the long haul," he added. "We are looking for return on invested capital, free cashflow and happy customers in the space."
Analyst Megabuyte said it had been an "astonishing" quarter for AWS, adding that its revenue run rate now stands at $7.3bn.
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