AWS generated revenue of $9.95 billion in Q4, up 34% from a year ago

FAN Editor

Andy Jassy, CEO of Amazon Web Services, speaks at the 2019 CERAWeek by IHS Markit conference in Houston, Texas, on March 11, 2019.

Aaron M. Sprecher | Bloomberg | Getty Images

Amazon‘s cloud business picked up $9.95 billion in revenue in the fourth quarter, growing faster than analysts had expected.

Amazon Web Services revenue grew 34.0% on an annualized basis in the quarter, Amazon said in a statement on Thursday.

Analysts polled by FactSet had predicted $9.81 billion in AWS revenue, or a 32% growth rate. Revenue growth was down sequentially from 34.7% in the previous quarter.

While AWS represents only 11% of Amazon’s total revenue, it continues to serve as the company’s cash cow after years of dominance in the market, at greater scale than Alibaba, Microsoft, Google and other companies.

Of the $3.88 billion in operating income that Amazon captured in the fourth quarter, $2.60 billion of it, or 67%, was attributable to AWS. The operating income from AWS was more than the $2.45 billion consensus estimate among analysts polled by FactSet.

AWS continues to grow faster than Amazon’s North America and International business segments, although its growth has been steadily trending downward. Deutsche Bank analysts led by Lloyd Walmsley pointed to recent executive changes in a note distributed to clients on January 13 and suggested that, combined with competitive pressures and a slower pace of big companies moving applications to Amazon’s cloud, “underscore increased risk of further deceleration at AWS.”

The main competitor to AWS is Microsoft’s Azure cloud. Microsoft’s Azure cloud revenue growth accelerated sequentially in the fourth quarter, coming in at 62%, up from 59% in the prior quarter, although Microsoft doesn’t disclose Azure revenue in dollars.

In the fourth quarter the U.S. Defense Department awarded the Joint Enterprise Defense Infrastructure (JEDI) cloud contract, worth up to $10 billion over a decade, not to AWS but to Microsoft. Amazon is challenging the award in federal court.

Also in the fourth quarter Amazon announced a tool for automatically reviewing source code, a service based on the Cassandra open-source database software, computing infrastructure for quickly handling demand from 5G devices and other new products at its annual AWS Reinvent conference in Las Vegas. AWS also announced deals with BP, Fox and Novartis.

WATCH: Amazon’s cloud claim of being superior to Microsoft is valid, says Goldman’s Heath Terry

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