AWS sees growth slowing down, while Google Cloud sales rise sharply

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Amazon Web Services has seen its growth fall to its lowest point since the results of this Amazon division were reported separately. In the meantime, Google Cloud is experiencing considerable growth.

The growth of Amazon Web Services (AWS) in the second quarter of this year was 37 percent compared to a year earlier, writes Silicon Angle. Although that growth is dwarfed by the results of previous quarters, the department still accounts for most of Amazon’s profits. In addition, of course, a growth rate of 37 per cent is still enormous, something that many companies would immediately sign up for. Amazon as a whole recorded a profit of $2.6 billion or $5.22 per share this quarter. The company’s overall revenue increased by 20 percent to 63.4 billion dollars. However, analysts had expected a profit of $5.56 per share with a profit of $62.52 billion.

AWS accounted for 13 percent of Amazon’s sales with sales of $8.4 billion. Operating profit amounted to $2.1 billion, which is 69 percent of Amazon’s overall operating income.

Slowdown in growth

The growth of AWS has therefore slowed down considerably, which was a surprise for investors and interested parties. Amazon’s Chief Financial Officer Brian Olsavsky, however, states that the 37 percent growth in turnover does amount to an extra $9 billion in terms of annual turnover expectations. We are very pleased with the growth in absolute dollars, according to the CFO. However, expectations for the current quarter have been adjusted. Amazon thinks that the net number of sales between 17 and 24 percent grows to 66 billion to 70 billion dollars. Operating income is expected to be between 2.1 billion and 3.1 billion dollars. Analysts expected sales of $67.22 billion and operating income of $4.34 billion for the current quarter.

Google Cloud

Google parent company Alphabet reported better results than analysts had expected. The company had a net profit of USD 9.95 billion or USD 14.21 per share, compared with a profit of USD 3.2 billion a year ago, but 5 billion was then reserved for a possible EU antitrust fine, so the profit was actually USD 8.2 billion. Turnover rose by 19 percent to 38.94 billion dollars. Analysts had expected sales of $38.15 billion with a profit of $11.10 per share.

Google Cloud is still not a big part of Alphabet, but nevertheless had impressive numbers. Google-CEO Sundar Pichai announced that the cloud department is well on the way to achieving an annual turnover of 8 billion dollars. That’s double that of early 2018. However, this turnover is still less than a quarter of the annual turnover achieved by AWS.

Other income

The company does not disclose the exact location of Google’s cloud division in terms of profit and revenue. It is therefore unclear how much, for example, comes from the G Suite applications. In addition, the cloud department belongs to the other revenues segment, which also includes Google Play apps, smartphones and smart speakers. Sales from this segment increased by almost 40 percent this quarter to 6.2 billion dollars. Analysts had expected an increase of 27 percent to 5.63 billion dollars. However, according to CFO Ruth Porat, the Google Cloud Platform was again the third largest driver of revenue growth. Mobile search and YouTube ads were the other two.

This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.