AWS Q3: sales up 12% YoY to $23.06B, vs. $23.2B est., operating income up 29% YoY to $6.98B, vs. $5.63B est., operating margin of 30.3%, the widest in two years
AWS had previously paired much faster growth with expanding profits, including $6.68B in Q3 2018 revenue and $2.1B in operating income and $13.50B in Q1 2021 revenue. This quarter shows a much larger business growing more slowly but converting revenue into profit more efficiently.
The result also precedes a later return to faster AWS growth and higher operating income in Amazon's Q2 2024 AWS results, making this margin expansion an important marker in the unit's transition from hypergrowth to scaled operations.
First-order effects
AWS missed the reported revenue estimate slightly, but operating income beat expectations by a wide margin and the 30.3% operating margin reached its highest level in two years.
For Amazon, AWS generated $6.98B of quarterly operating income, strengthening the cloud unit's immediate contribution to company profitability despite 12% sales growth.
Second-order effects
The divergence between sales growth and profit growth shifts attention from AWS's growth rate toward its cost discipline and ability to preserve margins at scale.
Cloud rivals and enterprise buyers gain a clearer benchmark for the profitability that large-scale infrastructure operations can produce, increasing pressure to distinguish growth driven by durable workloads from growth that requires heavier spending.
Third-order effects
If sustained, the pattern supports a cloud-market structure in which scale and operational efficiency matter as much as revenue growth, favoring providers able to spread infrastructure costs across large customer bases.
The later acceleration in AWS revenue suggests margin discipline need not permanently trade off with growth, though the corpus does not establish which operating changes drove either result.
The trend: Hyperscale cloud is evolving from a growth-first business into one judged increasingly on operating leverage alongside revenue expansion.
Here's an idea, AWS competitors could sell cloud services for a third less. Gain share rapidly, break even while doing so. Price competition in a competitive market, it's possible if someone actually tries. [embedded post]
It's all about AWS. $AMZN shares rebounded 4% when Jassy said on the call that the pace and volume of AWS deals are picking up. Specifically they signed deals in month of September that add more to bookings than the first two months of the quarter.
One of the key takeaways from @amazon earnings call wrt to @awscloud was the deal booking delays and the momentum pick up as of late. “We saw several deals in September with effective date in October that won't show in any GAAP reported number for Q3 but the collection of which..…
$AMZN 3Q'23 Update Imagine opening Amazon's earnings report 5 years from now and what do you think you might hope you paid more attention to? It's very unlikely to be AWS topline growth rate this (or any) quarter.
.@amazon earnings call is under way... Here's the AWS summary: @ajassy says we like the momentum in AWS and implies that customers' cost consciousness is still a factor. GenAI wrt AWS coverage during call: Infrastructure Layer: Jassy then focused on chips, the bottom layer of... …
“GenAI has three macro layers. Compute, to train LLMs and produce inferences, which we meet with custom silicon. LLMs as a service, which we meet with Bedrock. The third is apparently coding assistants, which we meet with CodeWhisperer.” So the third layer is just that? Really?
$AMZN flat AH after posting strong 3Q results but a light 4Q rev guide. Moreover AMZN was not able to say whether AWS growth had bottomed (+12.3% in 3Q) because of “customer optimization.” With MSFT Azure growing at +27% YoY and AMZN AWS growing at +12% YoY, AWS is losing market.…
On a call with reporters, Amazon's CFO stated about @awscloud's slowdown: “We have cost optimization work that is starting to slow down, at least” Good job AWS, no notes. Mission Accomplished. [image]
*DING*" goes the market's closing bell, and *plop* goes this shitpost thread to cover $AMZN's earnings report with a special emphasis on @awscloud. AWS revenues grew 12%, mostly because nobody knows how the hell AWS Config charges, much less how to get it to stop.