Amazon Web Services is still the biggest profits vehicle for Amazon, but its growth is slowing. In the third quarter, sales increased 27% year-on-year to $20.5 billion, but that was 6% below the 33% growth seen in the second quarter.
AWS’ quarterly operating income was $5.4 billion, compared with operating profits of $4.9 billion last year. That’s 10% annual growth, but well below the 36% profits growth seen in the second quarter.
Overall, the Amazon group’s results resulted in a 20% slump in the share price last night.
Revenues increased 15% to $127.1 billion, and operating income nearly halved to $2.5 billion. If it wasn’t for AWS, the Amazon group would not be profitable.
Amazon online sales grew 13% to $53.5 billion, and subscription services – including Prime - grew 14% to $8.9 billion.
Advertising grew 30% to $9.55 billion. What sent the share price down was the Q4 outlook, covering the xmas season. Analysts were expecting sales of around $155 billion, but Amazon offered guidance of only “$140 billion to $148 billion”.
The company also admitted the group may well slip into an overall loss for the final quarter too.
