All the key info as AWS and Google open up on cloud performances

Amazon and Alphabet see share prices fall after disappointing investors, but both tout cloud growth

Amazon and Google's parent company Alphabet appear to have disappointed Wall Street after seeing their share prices drop in after-hours trading, despite both reporting revenue growth.

For the three months ending 30 September 2018 Amazon saw sales increase 29 per cent to $56.6bn (£44.2bn), while Alphabet's revenue rose 24 per cent to $27.8bn.

Amazon reported operating profit of $3.7bn, while Alphabet's was $8.3bn.

Despite the growth, both firms saw their share prices drop (Amazon 10 per cent and Alphabet five per cent), with the pair reportedly disappointing with revenue growth and forecasts.

Amazon Web Services (AWS) continues to be the jewel in the e-commerce giant's crown, showing no signs of slowing, while Amazon Business appears to be growing at an impressive rate.

Google, like Microsoft (which released its results earlier this week), is more guarded when it comes to cloud numbers, but also claims to be seeing strong growth.

Here we round up the key information from Alphabet's and Amazon's quarterly numbers.

Amazon

AWS' growth continued, despite sales reportedly coming in slightly under analyst expectations.

Net sales for the cloud computing arm were up 45.7 per cent year on year to $6.7bn, while operating profit was up 77.4 per cent to $2.1bn.

AWS contributed over half of Amazon's overall operating profit.

Amazon's chief financial officer Brian Olsavsky credited AWS with driving Amazon's "very strong growth", adding that some of AWS' growth has occurred because of efficiencies in Amazon datacentres.

Olsavksy also addressed concerns that AWS may struggle to maintain growth.

"This growth rate is going to bounce around," he said on an earnings call, transcribed by Seeking Alpha.

"We've had sequential increase in growth rate the prior three quarters, I believe. This quarter is slightly down, but 46 per cent growth is very strong.

"We are at an annualised run rate above $26bn and that was about $18bn this time last year.

"So we're very happy with the growth in the business, the momentum that we're seeing with enterprise customers, and we just mentioned on the cost side. It's been a very good year from gaining greater efficiencies in our infrastructure costs."

Amazon also boasted of its success with Amazon Business, with its B2B operation the only arm of the giant mentioned by Jeff Bezos in the earnings release.

Amazon Business provides a platform through which sellers can reach business customers. Amazon itself also sells through the system, which launched in the UK in 2017, and earlier this year won a £600m public sector contract.

Bezos added: "We're not slowing down. Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100.

"These organisations are choosing Amazon Business because it increases transparency in business spending and streamlines purchasing, with increased control. The team is doing a fantastic job building and innovating for customers."

Alphabet

Google's public cloud revenue is the hardest of the big three's to assess.

Amazon is open on AWS' revenue and Microsoft at least gives a revenue growth percentage for Azure, but Alphabet bundles Google Cloud Platform sales in "other revenues" along with other areas including the Play store and hardware.

This category saw sales increase 29.2 per cent year on year to $4.6bn.

As he often is, Google CEO Sundar Pichai was coy on the cloud performance when speaking on an earnings call, transcribed by Seeking Alpha, limiting his comments mostly to examples of customer wins.

However, he suggested that Google Cloud Platform is still developing, claiming that "it's very clear to us that we are laying the foundation and we are getting the strong early momentum".

"We are definitely seeing strong indicators that the investment in product is clearly beginning to work," he added.

"Our value proposition does come through in many competitive situations. I've seen many important wins in what seem like very, very competitive situations.

"And on the go-to-market side, we have really ramped up in terms of our investments, our direct investments, but also our partnership strategy is beginning to work. When I look at the pipeline ahead, we are clearly seeing momentum there as well."