AWS Revenue Growth Continued for Amazon in Q4
Strong AWS results again helped Amazon report stronger results, in its fourth quarter (ended Dec. 31), the company said Feb. 3.
AWS revenue soared 40% to $17.8 billion in Q4 from $12.7 billion in Q4 a year earlier, while AWS operating profit increased to $5.3 billion from $3.4 billion.
Total Amazon revenue increased 9% to $137.4 billion, while profit increased to $14.3 billion billion ($27.75 a share) from $7.2 billion ($14.09 a share).
“AWS saw a continuation of the strong usage and revenue growth we’ve seen throughout 2021… as enterprises and developers continued to look to AWS for critical innovative cloud solutions,” according to Amazon CFO Brian Olsavsky.`
“AWS added more revenue year-over-year than any quarter in its history, and it’s now a $71 billion annualized run rate business, up from [a] $51 billion run rate one year ago,” he told analysts on an earnings call.
The company “announced more than 115 new services and features” during its 10th re:Invent conference in the quarter “as businesses spanning all major industries continue to choose AWS as their technology provider to speed up innovation in their organizations,” he said.
The conference, which was attended by 26,000 in-person attendees and “hundreds of thousands” virtually this time, “remains a highlight of the year for us because it’s a great opportunity to introduce new services while engaging with customers and partners to better inform where we should be focusing next,” he noted.
Latest Customer Wins
AWS scored more customer wins in Q4, including Nasdaq, which he pointed out, announced a multiyear partnership to “migrate its North America markets to AWS, including their matching engine.”
Best Buy, meanwhile, “selected AWS as its preferred cloud provider for cloud infrastructure services,” and Facebook parent company Meta selected AWS as its “long-term strategic cloud provider to accelerate artificial intelligence research and development,” he said.
During the Q&A, he told analysts that the AWS growth acceleration was driven by a “combination of things,” explaining: “We’ve been adding resources in sales and marketing over the last few years, and that is starting to pay off. There was some cutback in spending in the early parts of 2020 that we’re lapping as… different companies had different COVID experience. [For] some, their volumes went through the roof; some, their volumes went through the floor. So as things have stabilized, I think the lasting thing is that a lot of people made the commitment to go to the cloud, better understood the benefits of that and probably accelerated their internal time lines for that.”
In addition to being “pleased with the acceleration in the business the last four quarters,” he said: “We’re also pleased with the efficiency of the infrastructure investment” in AWS, adding these were all “very positive indicators in AWS.”
AWS is also “continuing to see considerable momentum really around the world,” according to Dave Fildes, head of investor relations at Amazon. “It’s customers moving their workloads over to AWS at different phases,” he said.
“What’s been important to us, amongst many things, is continuing to expand our global infrastructure footprint really to support this momentum we’re seeing,” Fildes went on to say. “In the fourth quarter, we opened the Asia Pacific region over in Jakarta. And we’ve got announcements for plans to launch in Canada and the Calgary region… [in] perhaps 2023 or 2024. So a lot of work and a lot of momentum.”
AWS now has “84 availability zones in 26 regions around the world,” Fildes added. “Just in terms of the forward-looking roadmap, we have announced [plans] to launch 24 more zones in eight more regions, and those will be here in the next couple of years.”
Prime Price Increase
Noting Q4 included Amazon’s second holiday season during this pandemic, he said that, on the “consumer side, we welcomed millions of new Prime members in both the United States and international during the quarter, while continuing to see consistently high member renewal rates across geographies.”
The company will boost the price of Prime in the U.S. in the current quarter, he disclosed, saying: “We continue to make Prime better. In recent years, we’ve added more product selection available with fast, free, unlimited shipping, more exclusive deals and discounts and more high-quality entertainment, including TV, movies, music and books.”
Since 2018, Prime Video has also tripled the number of Amazon Originals programs, he pointed out. Coming up in September, Prime Video will release the first episode of the Amazon series The Lord of The Rings: The Rings of Power, he noted. The service has also “become the exclusive home” of Thursday Night Football as part of an 11-year deal with the National Football League, he added. Additional Prime benefits include the “continually growing Amazon Music catalog for Prime members, as well as Prime Reading and Prime Gaming,” he said.
This “continued expansion of Prime member benefits and the increased member usage that we’ve seen, as well as the rise in wages and transportation costs,” has led Amazon to increase the price of Prime membership in the U.S., he went on to say.
The monthly price will increase from $12.99 to $14.99 and the annual membership will increase from $119 to $139, he disclosed, pointing out: “This is our first price increase since 2018. For new Prime members, the price change will go into effect on February 18. For current Prime members, the new price will apply after March 25 on the date of their next renewal.”