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Amazon Reveals AWS Is a Nearly $5 Billion Business and Is Profitable

In other news, Amazon's first-quarter earnings were basically in line with expectations.

Amazon Web Services
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Amazon has finally taken the shroud off its giant cloud computing business, AWS.

The company, which hasn’t previously broken out AWS results, said its Web services business grew 49 percent in 2014 to $4.6 billion in revenue. In the first quarter, AWS revenue grew 49 percent to $1.6 billion.

AWS operating margin was 17 percent in the first quarter, down from 23 percent in the same period last year, owing to a 62 percent increase in operating expenses year over year.

The AWS disclosure highlights the stark differences between it and Amazon’s core North American and international businesses. While those businesses still combine for 93 percent of Amazon revenue, AWS is growing much faster at 49 percent. Compare that to the North America business, which grew 24 percent in the first quarter year over year, and the international business, which shrank 2 percent.

Investors have long known AWS was the fastest-growing part of Amazon, but seeing real numbers may lead some investors to call for it to be spun off into a separate company. Still, CEO Jeff Bezos has never been known as an executive who makes decisions based on investor pressure.

AWS, which launched in 2006, has become the go-to cloud services businesses for technology startups over the past few years. Its services provide Internet companies with the computing power and data storage to run a wide variety of online businesses without the need for them to own their own servers. In addition to startups, AWS counts some big Web companies as customers, including Netflix and Dropbox, as well as the CIA. The business came under pricing pressure from competitors such as IBM in the first half of 2014, but price cuts have slowed since then.

The much-awaited AWS disclosure overshadowed a relatively in-line quarter from Amazon. The company recorded a loss of 12 cents per share on revenue of $22.7 billion, slightly beating estimates from analysts, who were expecting a loss of 13 cents per share on revenue of $22.4 billion. Amazon, like many American businesses, said the strong dollar brought down results.

Amazon’s stock was up almost 5 percent in after-hours trading.

This article originally appeared on

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