How Profitable Is Amazon’s Cloud Business?
AWS operating profit rose to $1.2 billion
Not only did Amazon’s (AMZN) cloud computing revenues increase in 3Q17, the profitability of the business also improved significantly compared to 2Q17 and 3Q16.
An analysis of Amazon’s financial performance in 3Q17 reveals that its bottom line without Amazon Web Services (or AWS) would look very different.
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In 3Q17, AWS generated revenues of $4.6 billion and posted an operating profit of $1.2 billion. These metrics are up from an operating profit of $916.0 million in 2Q17 and an operating profit of $861.0 million in 3Q16.
AWS provided cover for Amazon’s bottom line
Amazon posted consolidated operating profit of $347.0 million in 3Q17. Aside from AWS, Amazon reported an operating loss of $824.0 million in 3Q17. AWS stood in the gap for Amazon and helped the company turn a net profit of $256.0 million in 3Q17.
The chart above shows Amazon’s quarterly net profit trend since 3Q16.
Amazon’s main cloud rivals posted bigger profits
Amazon’s net profit of $256.0 million in 3Q17 was smaller than what several of its main cloud computing challengers posted in a similar period. The company’s cloud computing rivals Microsoft (MSFT), IBM (IBM), Oracle (ORCL), and Alphabet (GOOGL) posted net profits of $6.6 billion, $2.7 billion, $2.2 billion, and $6.7 billion, respectively, in their quarters corresponding to Amazon’s 3Q17.