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Amazon’s online services boom

The company’s cloud services business combined with a surge in Prime subscriptions to increase revenue 31% year on year.

Amazon Web Services, the company’s cloud service division, has long provided the infrastructure for vast retail websites and plucky startups alike, from Netflix and Airbnb to Nasa and the Royal Opera House, but is now seen as the company’s biggest driver of growth.

AWS combined with enthusiastic take-up of its premium “Prime” service to generate better than expected revenue for the second quarter of the year.

Total revenue reached $30.4bn, up 31% from the same period in 2015 and higher than analysts’ expectations of $29.55bn, while AWS surged 58.2% to $2.89bn – slightly higher than the estimate of $2.83bn predicted by market research firm FactSet StreetAccount.

Prime offers free shipping on products from the site as well as exclusive film and TV content, advertising-free content and unlimited photo storage. A dedicated promotional “Prime Day” on 12 July is also expected to help drive sales of between $31.0bn and $33.5bn for the current quarter.

The company’s net sales rose 31.1% to $30.40bn in the second quarter ending 30 June. Sales in North America, its biggest market, jumped 28.1% to $17.67bn.

Amazon also saw its net profit reach a record high of $857m, continuing a relatively new strategy of recording profit rather than reinvesting in its business – though it last quarter committed to investing $5bn into its business in India.

“It’s been a busy few months for Amazon around the world, and particularly in India,” said the CEO, Jeff Bezos, in a statement.

“We launched a new AWS region, introduced Prime with unlimited free shipping, and announced that Prime Video is coming soon, offering Prime members in India exclusive access to Amazon Original Series and Movies – including original content featuring top Indian creators and talent.”

The world’s biggest online retailer’s shares were up 2% in after-hours trading on Thursday.

Charlie James Tennant

Editor-in-chief

Developer, videographer, photographer and a stickler for English grammar.

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