AWS quarterly revenue continues to rise, but growth slows

The rocketship of cloud growth continued at the end of 2016 for Amazon Web Services. The public cloud provider announced Thursday that it brought in a little more than $3.5 billion during the fourth quarter of last year, up 47 percent from the same period in 2015. Quarterly operating income rose 60 percent to $926 million, compared to $580 million during the prior year quarter. 

That’s nothing to sneeze at, but AWS’s revenue growth was the lowest it has been in the past two years. There are a number of potential explanations for that, including seasonal changes in cloud migrations, and difficulty driving increased growth on larger and larger total revenue.

Continuing growth is a positive sign for AWS, which is locked in tight competition with companies including Microsoft and Google to try and power the next generation of business applications. Amazon said AWS launched 1,019 new features in 2016 as part of that push.

Microsoft’s Intelligent Cloud revenue segment brought in $6.9 billion in revenue during the same period. However, that also includes revenue from sources beyond its Azure cloud platform, including licenses for software including Windows Server and SQL Server.

A series of price cuts for AWS services kicked in during the quarter. Amazon CFO Brian Olsavsky said on a conference call with financial analysts that such cuts are “going to be a constant in this business.” It’s unclear exactly what impact they may have had on the cloud provider’s overall financial results. 

Overall, Amazon’s fourth quarter revenue was $43.7 billion, up 22 percent from $35.7 billion at the end of 2015. The company’s fourth quarter profit was $749 million, compared to $482 million during the prior year quarter.