AWS Q3 results show higher revenue, but slow sales

AWS and DXC Technology

Amazon has announced its third-quarter financial results, with the AWS cloud platform becoming a key driver of revenue in spite of slowing sales.

For the quarter ended September 30, 2023, parent company Amazon saw overall revenue of $143.1bn, a 13 percent increase year-on-year (YoY), whilst AWS reached $23.06bn in revenue, ending a six-quarter downfall trend. 

However, growth didn’t come much stronger than in the previous quarter, falling short of the $23.2bn expectation set by StreetAccount analysts.

Brian Olsavsky, CFO of Amazon, explained the AWS turbulence citing “optimization headwinds”:

“On a quarter-over-quarter basis, we added more than $900m of revenue in AWS as customers are continuing to shift their focus toward driving innovation and bringing new workloads to the cloud. Similar to what we shared last quarter, while optimization still remains a headwind, we’ve seen the rate of new cost optimization slow down in AWS, and we are encouraged by the strength of our customer pipeline”. 

The AWS segment income was up $1.6bn YoY, for a total of $7bn, compared with an operating income of $5.4bn from a year earlier.

Operating margin for the quarter reached 30.3 percent – “an improvement of approximately 600 basis points quarter-over-quarter, primarily driven by increased leverage on headcount costs,” Olsavsky explained.

Andy Jassy, CEO of Amazon emphasized during the investors’ call that AWS growth continues to stabilize:

“The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI, where the combination of our custom AI chips, Amazon Bedrock being the easiest and most flexible way to build and deploy generative AI applications, and our coding companion (CodeWhisperer) allowing enterprises to have the equivalent of an experienced engineer who understands all of their proprietary code.

“[This] is driving momentum with customers, including Adidas,, GoDaddy, LexisNexis, Merck, Royal Philips and United Airlines, all of whom are starting to run generative AI workloads on AWS. Between AWS re:Invent and our 29th holiday shopping season, this is a particularly action-packed time of year at Amazon and we’re excited for what’s to come.”