M+E Connections

Strong Amazon Web Services (AWS) results again helped Amazon report stronger results in its second quarter (ended June 30), the company said July 28.

AWS revenue jumped 33% to $19.7 billion in Q2 from $14.8 billion a year ago, while AWS operating profit increased to $5.7 billion from $4.2 billion. Total Amazon revenue increased 7% to $121.2 billion from $113.1 billion.

“We saw another strong quarter of innovation and customer engagement in AWS,” according to Amazon CFO Brian Olsavsky.

“AWS continues to grow at a fast pace, and we believe we’re still in the early stages of enterprise and public sector adoption of the cloud,” he told analysts on an earnings call.

Looking ahead, he said: “We see great opportunity to continue to make investments on behalf of AWS customers. We continue to invest thoughtfully in new infrastructure to meet capacity needs while expanding AWS to new regions, developing new services and iterating quickly to enhance existing services. Developers and organizations of all sizes, from governments and not-for-profits to start-ups and enterprises, continue to choose Amazon Web Services.”

During Q2, companies including BT Group, Delta Airlines and Riot Games announced new agreements and service launches supported by AWS, he pointed out.

The reported AWS results included a mix of various costs “reflecting wage inflation in high-demand areas, including engineers and other tech workers, as well as increasing technology infrastructure investment to support long-term growth,” he told analysts. In 2021, Amazon incurred about $60 billion in capital investments, about 40% of which was “comprised of technology infrastructure, primarily supporting AWS, as well as our worldwide stores business,” he noted.

For 2022, Amazon expects to “spend slightly more on capital investments than last year, but the proportion of capital spending shifts among our businesses,” he said, adding: “We expect technology infrastructure spend to grow year over year, primarily to support the rapid growth and innovation we’re seeing with AWS. We expect infrastructure to represent a bit more than half of our total capital investments in 2022.”

The Amazon Prime membership program, meanwhile, “remains a key driver of our worldwide stores business, and we continue innovating to make the membership even more useful and valuable,” he told analysts. “That includes the upcoming premiere” of the exclusive series Lord of the Rings: The Rings of Power on Sept. 2 and exclusive access to NFL Thursday Night Football games starting Sept. 15, he said.

Amazon projected it will report Q3 operating income within the wide range of $0 to $3.5 billion. That “assumes we see approximately $1.5 billion in quarter-over-quarter sequential cost improvement in our fulfillment network operations, which we expect will be largely offset by investments in AWS and additional digital content for Prime members,” according to Olsavsky.

For AWS, these quarter-over-quarter increases are “primarily driven by higher infrastructure investments to support continued strong customer growth, including larger depreciation on a growing fixed asset base,” he said. “We also expect increased energy costs as we continue to see volatility in utility prices around the world in operating our AWS data centers.”

During the Q&A with analysts, he told analysts that Amazon continues to see AWS as a “huge opportunity” for it, adding: “It’s early days in the adoption curve for companies and governments and we invest with that confidence in mind. And customers have responded and we’re going to keep investing there.”

In Q2, AWS “added to its more than 200 products and services to help customers lower costs, increase agility and innovate faster,” Amazon said in its earnings news release.

AWS continues to innovate in generalized central processing units (CPUs) and, in Q2, announced the general availability of Amazon Elastic Compute Cloud (Amazon EC2) C7g instances, the next generation of compute-optimized instances powered by AWS-designed Graviton3 processors.

AWS, meanwhile, announced the general availability of AWS Mainframe Modernization as the company “further expands support for every type of workload,” Amazon said. “AWS Mainframe Modernization makes it faster and easier for customers to modernize mainframe-based workloads by moving them to the cloud, with no upfront costs or underlying infrastructure to manage,” it said.

AWS also announced the general availability of AWS Cloud WAN, a managed wide area network service that Amazon said “makes it faster and easier to build, manage and monitor a unified network that spans multiple locations and seamlessly connects cloud and on-premises environments.”

AWS Cloud WAN “connects data centers, branch offices, and cloud resources into a single, centrally managed network that reduces operational cost and complexity while improving network health, performance, and security, so enterprises can remove the need to individually configure and manage multiple networks using different technologies,” Amazon said.

And AWS and Amazon Ads in Q2 also launched Amazon Marketing Cloud (AMC) Insights on AWS, a new solution the company said “helps advertisers and agencies easily use AWS services when running Amazon Ads campaigns to analyze and generate reporting from” the Amazon Marketing Cloud application programming interface (API).