AWS Growth Provided Amazon with a Q2 Boost Again

Amazon Web Services (AWS) growth was again strong in Amazon’s second quarter (ended June 30) and the company continued to see positive trends in enterprise migration and adoption of its cloud services, according to Amazon CFO Brian Olsavsky.

Amazon reported AWS revenue grew to $8.4 billion in Q2 from $6.1 billion a year ago, while AWS operating income increased to $2.1 billion from $1.6 billion.

The AWS run rate, meanwhile, increased from $24 billion to $33 billion – an achievement that was “second only to Q4 of last year as far as our history,” Olsavsky told analysts July 25 in an earnings call with analysts. “We’re very happy with the growth in absolute dollar terms that we’re seeing,” he said.

At the same time, Amazon was pleased with the “pickup from customers and their usage, their increased pace of enterprise migration [and] increased adoption of our services, especially our machine learning services,” he said.

AWS, meanwhile, continues to be “chosen as a partner to many companies because of our leadership position … in technology, our vibrant partner ecosystem and also the stronger security that we offer,” he told analysts.

Amazon is especially “seeing a lot of increased adoption of machine learning services” with its Amazon SageMaker cloud machine learning platform, he said, adding: “We’ve had tens of thousands of customers who are now using AWS machine learning services and we’ll continue to innovate on behalf of those customers.” The company released “more than 200 machine learning features and capabilities in 2018 alone in this area,” he noted.

Amazon singled out several AWS milestones in its earnings news release, including the fact that new customer commitments and major migrations during the quarter included the National Association for Stock Car Auto Racing (NASCAR), which selected AWS and SageMaker as its standard for cloud-based machine learning and artificial intelligence workloads, and Sony Music Entertainment Japan, which selected Amazon Managed Blockchain for the development of a digital music rights management system.

AWS announced the general availability of Amazon Managed Blockchain in Q2, the company pointed out, saying the fully-managed service “makes it easy to create and manage scalable blockchain networks that allow multiple parties to execute transactions and maintain a cryptographically verifiable record without the need for a trusted, central authority.”

Amazon Managed Blockchain also “scales to support thousands of applications and millions of transactions using popular open source frameworks like Hyperledger Fabric and Ethereum,” it said.

In Q2, AWS also announced the general availability of Amazon Personalize, a fully-managed machine learning service that Amazon said “trains, tunes, and deploys custom, private machine learning models,” adding “the service brings the same machine learning technology used by Amazon.com to engage with millions of shoppers to AWS customers, so they can easily develop applications with a wide array of personalization use cases, including specific product recommendations, individualized search results, and customized direct marketing — with no machine learning experience required.”

During the quarter, AWS also announced the general availability of AWS Ground Station, a service that the company noted “makes it easy and cost-effective for customers to control their satellites using AWS and download data into AWS Global Infrastructure Regions using a fully-managed network of ground station antennas located around the world.”

AWS additionally announced the general availability of Amazon Textract, a fully-managed machine learning service that it noted “automatically extracts text and data, including from tables and forms, in virtually any document without the need for manual review, custom code, or machine learning experience.”

AWS also announced the general availability of: AWS Control Tower, a service that Amazon said “makes it as easy for customers to set up and continuously govern secure, compliant, multi-account AWS environments as it is to select items from a menu”; AWS Security Hub, a service that gives customers a central place to manage security and compliance across an AWS environment; and Amazon Managed Streaming for Apache Kafka (Amazon MSK), a fully-managed service that the company said “makes it easy for developers to build and run highly available, secure, and scalable applications based on Apache Kafka without having to worry about managing the underlying infrastructure.”

Since launching in 2016, the number of databases migrated to AWS using the AWS Database Migration Service has grown to more than 150,000 databases, Amazon also said.

Total Amazon Q2 revenue grew 20% from a year ago to $63.4 billion, while profit inched up to $2.6 billion ($5.22 a share) from $2.5 billion ($5.07 a share).

“Overall, we thought the revenue” that Amazon reported for Q2 was “fabulous, but AWS flattening out dollar growth in 2Q19 vs 2Q18 after a weaker 1Q19 vs 1Q18 on weaker margins is likely to generate some concerns,” Pivotal Research Group analyst Michael Levine said in a research note. The 37% AWS growth was weaker than the 41.4% growth reported by Amazon for Q1 this year and his estimate of $8.6 billion in revenue and the street’s expectation of $8.5 billion, he said.