Amazon Cloud Revenue Hits $2.9B

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Amazon reported its second quarter fiscal 2016 earnings on July 28, and once again the company’s cloud revenue grew.

For the quarter Amazon Web Services (AWS) revenue was reported at $2.89 billion, up by 58 percent from $1.82 billion in second quarter of fiscal 2015. So far this year, AWS has generated $5.5 billion in revenue, up from $3.4 billion in the first six months of fiscal 2015.

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During Amazon’s earnings call, CFO Brian Olsavsky called out AWS increasing operating margin as well, with operating income of $718 million, and a 24.9 percent operating margin compared with $305 million in the prior year.

Moving forward, Amazon is planning on further expanding AWS in the coming year. Olsavsky said that the plan is for nine availability zones in four regions to come out in the coming year. Adding the new regions doesn’t necessarily mean an immediate expectations of higher revenues for AWS.

“We don’t see a large step-up from the addition of new regions relative to the large and rapid growth in the business itself,” Olsavsky said. “We do think that it does pay benefits both for ourselves and for our customers.”

Olsavsky added that when AWS expands geographically, existing customers will run more of their workloads on AWS overall. He noted that sometimes customers have local latency concerns or security issues that require them to run things in their country, so having additional availability zone helps.

During the call, Olsavsky was asked about the impact of cloud competition from Google and Microsoft. Olsavsky’s view is that there is room for multiple cloud providers, though he expects Amazon to dominate.

“We’ve been in this business longer than anyone,” Olsavsky said. Having said that, there’s plenty of room for multiple vendors in this business.”

Amazon expects to differentiate against its cloud competitors with a focus on innovation and expanding the geographic footprint to make services more widely available. New innovations from AWS have come quickly this year already.

“We have had 422 new significant services and features added in the first half of this year,” Olsavsky said. “That’s a faster pace than last year when we added 722 services and features. So we feel good about the business position we’re in and our position with customers.”

Sean Michael Kerner is a senior editor at Datamation and InternetNews.com. Follow him on Twitter @TechJournalist