Despite some setbacks in the past quarter, primarily due to the loss of the JEDI government cloud contract to compete with Microsoft Azure, Amazon Web Services (AWS), has exceeded Wall Street’s expectations in its most recent financial period.
Amazon, the parent company, reported its fourth quarter earnings Thursday. AWS reported $9.95 billion in revenue for the quarter ended December 31, an increase of 34% year-over-year and nearly 11% over the previous quarter. Analysts had projected revenues of $9.81 trillion for the cloud unit.
Amazon’s operating income for the quarter was $2.6 Billion, or 67% of its total.
AWS revenues reached $35 billion for the entire fiscal 2019, a 37% increase on fiscal 2018.
Despite slowing growth, Amazon’s fastest-growing business unit is still AWS. The cloud unit has been slowing its revenue growth since Q4 2018, which saw a 46% increase year-over year. This quarter’s 34% increase year-over year is the lowest since Amazon started reporting AWS earnings separately.
Azure, AWS’ closest competitor, saw a 62% increase in revenue over the previous year according to Microsoft’s latest financial report. This was in comparison to Azure. Microsoft doesn’t disclose Azure revenue in exact dollars, but Azure’s Commercial Cloud unit, which Azure is part of, saw revenues of $12.5 Billion in the quarter. This 39% increase year-over-year.
Amazon and Microsoft have been in a legal tie up over a $10 billion, 10-year cloud contract with the U.S. Department of Defense, dubbed the Joint Enterprise Defense Infrastructure (or JEDI). Despite AWS’ dominant cloud market share, the contract was awarded last fall to Microsoft. Amazon has filed a formal protest since then and is trying to delay the implementation.