AWS 2Q17 Earnings Analysis : Quick View

Today after the equity markets closed Amazon reported earnings. The highlights for AWS 2Q17 earnings were as follows:

AWS 2Q17 Earnings

From Amazon Investor Relations

AWS 2Q17 Earnings

From Amazon Investor Relations

  • AWS, the world’s largest public cloud, reported revenue of $4.1B in 2Q17.
  • Trailing Twelve Month (TTM) revenue totals $14.53B.
  • AWS 2Q17 operating income was reported at $916M, up 28% Y/Y. 1Q17 operating income was $890M.
  • AWS operating margin declined for the third quarter in a row to 22.3%, vs. 26.2% (4Q16) and 24.3% (1Q17) in the past two quarters.
  • Amazon reported growth of AWS revenue was at 42% Y/Y; $4.1B in 2Q17 compared to $2.89B in 2Q16.
  • As mentioned during the 1Q17 earnings call, Amazon data and subsequent analyst conference call comparisons were presented in Y/Y terms.




Cloud City Analysis of AWS 2Q17 Earnings

Overall Amazon reported $38 billion in revenue and $0.40 per share in earnings against Wall Street’s expected earnings of $1.42 per share on $37.18 billion in revenue. Amazon Web Services posted a solid 2Q17 earnings report in our view but may dissapoint some investors hopnig to see more short-term movement in the share price. As we reported last week, some analysts were anticipating declines in the growth rate to below 40% vs. the reported Y/Y revenue growth of 42%. Deutsche Bank expected AWS to show 39% growth, from its original projection of 40% at the beginning of the year.

AWS is running into market pressure from several sources (our Kubernetes report here) and we could see this Y/Y growth number for 3Q17 come in at the level Deutsche Bank forecasted for 2Q17. Given the investments in AWS opening a new region in Hong Kong as well as a second GovCloud region, we could also see the first operating margin for AWS reported below 20%.




Matthew Scott