Public cloud mash-up: The best of the big three's earnings results
Public cloud leaders AWS, Microsoft and Google all released their quarterly results this week. We've picked out the key information from the trio's numbers
Amazon, Microsoft and Google all released their quarterly earnings this week, shedding further light on the race for public cloud dominance.
Amazon boasted impressive results in its AWS unit, with revenue up 49 per cent. Microsoft saw Azure revenue up 93 per cent, while Google - which is the most difficult of the three to judge - saw revenue for the unit that encompasses cloud grow 35.7 per cent.
CRN has picked out the key information from all three reports.
Amazon Web Services
AWS reported a revenue of $5.5bn (£4.5bn) for the three months ending 31 March 2018, with operating income up 57 per cent to $1.4bn.
The Amazon business as a whole saw revenue jump 43 per cent to $51bn, with operating profit growing at a similar pace to $49.1bn.
AWS continues to be the prime money maker for Amazon. The wider business ran at an operating margin of just 3.8 per cent for the quarter. AWS, however, saw a margin at 25.7 per cent.
This means that 74 cents of every $1 of Amazon profit comes from AWS.
Amazon CEO Jeff Bezos picked out AWS' performance in the earnings release, taking a subtle swipe at the firm's competitors.
"AWS had the unusual advantage of a seven-year headstart before facing like-minded competition and the team has never slowed down," he 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."
Microsoft
It is far harder (practically impossible, in fact) to build up a complete picture of Microsoft Azure's performance. The most specific figure offered by the vendor is that Azure revenue grew 93 per cent over the quarter. CEO Satya Nadella said this growth came on a "significant revenue base", although this base is much smaller than AWS'.
Overall, Microsoft saw revenue increase 16 per cent to $26.8bn, with a gross margin of $17.5bn.
Microsoft bundles Azure with other cloud offerings in its Intelligent Cloud group.
Revenue for this unit was $7.9bn, equating to 29.4 per cent of Microsoft's total revenue.
The Productivity and Business Processes unit contributed just over $9bn, while the remaining $9.9bn came from More Personal Computing.
On an earnings call, transcribed by Seeking Alpha, Nadella said that he expects Azure to continue posting strong growth, even as the revenue base grows broader.
"It's true that we are at this point of scale on Azure and with very, very high growth rates," he said.
"The key thing that we think about is differentiation of Azure at each level because that's what is super important for us as we compete in this marketplace and more importantly double down on areas of differentiation we have.
"The growth will moderate as the numbers become big, and they've already become very big.
"But that said, we see plenty of opportunity for total gross margin growth in terms of dollars just because of the number of markets that we participate in which we, by the way, never participated in in the old server world."
In its current quarter Microsoft expects Intelligent Cloud revenue to be between $8.95bn and $9.15bn.
Elsewhere in the portfolio the Productivity and Business Processes unit saw revenue increase 17 per cent, which Microsoft attributed to 42 per cent growth in Office 365 commercial sales. LinkedIn revenue was also up 37 per cent.
In the computing division revenue was up 13 per cent, with sales from Microsoft Surface products up 32 per cent as a result of product end-of-life cycles.
Alphabet, Google's parent company, lumps Google Cloud Platform (GCP) in with its hardware and app store units, making it difficult to establish the size of its public cloud business.
Overall, Alphabet reported revenue of $31.1bn, up 26 per cent on the same quarter last year.
The ‘Other' category, which houses GCP, saw revenue increase 36 per cent to $4.5bn.
Google says this part of the business highlights the growing contributions of its "non-ad opportunities".
The cloud business is viewed as one of the "three big areas" by Google, along with hardware and YouTube.
Google is on course to having 20 cloud regions worldwide, once all the launches in the pipeline have taken place.
On an earnings call, transcribed by Seeking Alpha, Google CEO Sundar Pichai said: "Last quarter, we shared some exciting metrics about the progress of Google Cloud, including that we passed $1bn per quarter in 2017.
"In Q1, we saw increasing momentum. We are growing across the board and are also signing significantly larger, more-strategic deals for cloud. Our security capabilities, the easy-to-use advanced data analytics and machine-learning solutions, and the secure and industry-leading collaboration platform, G Suite, are winning customers over."