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Amazon Web Services Tops Analysts' Estimates on Profit and Revenue

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Adam Selipsky, CEO of Amazon Web Services and then CEO of Tableau Software Inc., speaks during the opening keynote of the 2019 Salesforce Dreamforce conference in San Francisco on Nov. 19, 2019.

  • Amazon's cloud unit had more operating income than the company as a whole.
  • Amazon Web Services will build cloud data centers in New Zealand.

Amazon's cloud unit grew faster than analysts had expected in the third quarter, as companies continue to rely on its computing and storage infrastructure to run websites and applications.

Revenue from Amazon Web Services totaled $16.11 billion in the quarter, up almost 39% from a year ago, according to a statement. Analysts polled by StreetAccount had expected $15.48 billion. Revenue had grown 37% in the second quarter.

AWS leads the growing cloud infrastructure market with about 41% share in 2020, according to industry researcher Gartner. In addition to providing revenue diversity, it also gives Amazon a healthy supply of income.

Almost 15% of Amazon's total revenue came from AWS. Amazon, the parent company, issued disappointing fourth-quarter guidance on Thursday along with weaker-than-expected results for the third quarter.

"On AWS, the acceleration, I would again — I would say that what we're seeing is, again a lot of customers accelerated their journey to the cloud based on the pandemic," Brian Olsavsky, Amazon's finance chief, said on a conference call with analysts. Companies in some industries, such as travel, suppressed spending in 2020, he said.

The Amazon cloud continues to look for operating efficiencies and reduce prices for customers, Olsavsky said.

AWS generated $4.88 billion in operating income for Amazon, up 38% and more than the $4.12 billion consensus that analysts had expected. Amazon as a whole ended the quarter with $4.85 billion in operating income, with an operating loss in the international business taking away from profitability in the cloud and in North America.

The AWS operating margin, at 30.3%, widened from 28.3% in the second quarter.

In the quarter AWS said it would give free USB security keys to some employees who work for U.S.-based customers, and it announced plans for a region of data centers in New Zealand.

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