AWS Revenue Q2 2022

Amazon Web Services CEO Adam Selipsky speaks at the AWS Reinvent conference in Las Vegas on November 30, 2021.

Noah Berger | Getty Images

Amazon said Thursday that revenue from its cloud segment rose 33% in the second quarter, beating analysts’ estimates.

Amazon Web Services generated $1[ads1]9.74 billion in revenue during the period, according to a statement. Analysts polled by StreetAccount had expected $19.56 billion. Growth slowed from almost 37% in the previous quarter.

Amazon was left with $5.72 billion in AWS operating revenue, up 36% year over year, but below the StreetAccount consensus estimate of $6.04 billion. Still, it played a decisive role across Amazon, which reported $3.32 billion in total operating income. AWS operating margin decreased to 29% from 35.3% in the first quarter.

While Amazon still counts retail for the bulk of its revenue, AWS is the company’s profit engine and provides a significant source of diversity as the economy slows and consumers clamp down on spending. But even areas of the high-tech market are seeing a change in customers’ buying behaviour.

Earlier this week, Alphabet and Microsoft reported declines in their cloud computing units. Both companies follow AWS, which controls an estimated 39% share. Microsoft reported 40% growth in Azure revenue, while Google’s cloud sales rose 36% year over year.

On Tuesday, when asked what led to Alphabet’s slowing growth in the Google cloud, CEO Sundar Pichai said “you see a varying mix of some customers affected in terms of their ability to spend, some customers just take a little longer and maybe in some cases thinking about the period they are booking for and so on.”

At Microsoft, growth in Azure cloud consumption was moderated during the quarter. CEO Satya Nadella told analysts on Tuesday that customers are “trying to make sure they can do more with less.” He said Microsoft is encouraging its vendors to make sure cloud bills are shrinking.

SEE: Amazon Web Services’ cyber security chief Steve Schmidt lays out his outlook for the rest of 2022

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