Amazon posts record cloud revenue, big Rivian profits

AWS cloud revenue

Amazon on Thursday reported revenue of $137.4 billion, slightly off from analyst expectations. But Amazon handily beat the street’s bet for earnings: Adjusted earnings per share (EPS) was $5.80, compared to $3.57 from Wall Street analysts. Amazon forecasts Q1 revenue of $112-$117 billion, slightly lower than analysts predicted.

Amazon’s Q4 earnings were aided by a windfall from its investment in electric vehicle (EV) maker Rivian Automotive, which provided Amazon with an $11.8 billion pre-tax valuation gain. Rivian completed an initial public offering in November. The company also announced plans to raise the subscription price of its popular Amazon Prime service by $20, from $119 to $139. It’s the first time Amazon has raised the price of the service since 2018.

Amazon Web Services (AWS) recorded 40% year over year (YOY) growth, its fastest rate of growth since the first fiscal quarter of 2019. AWS reported $17.78 billion in revenue for the quarter.

“AWS added more revenue year over year than any quarter in its history. It is now a $71 billion annualized run rate business, up from $51 billion run rate one year ago. Even on a large base, revenue increased 40% year over year. As I’ve mentioned in prior calls, we also encourage you to look at the multiyear compounded annual revenue growth rate since the onset of the pandemic to better put this revenue growth in perspective,” said Brian Olsavsky, Amazon CFO.

Maximizing AWS efficiency

Olsavsky noted that Amazon is extending the useful life of its servers from four to five years, and its network equipment from five to six.

“We’ve been operating at scale for over 15 years, but we continue to refine our software to run more efficiently on the hardware. This then lowers stress on the hardware and extends the useful life both for the assets that we use to support AWS’ external customers, as well as those used to support our own internal Amazon businesses,” he said.

“As a result, our first quarter guidance includes an approximate $1 billion of lower depreciation expense. We expect the quarterly impact of this change to decrease throughout the year. Although we’re calling out an accounting change here, this really reflects a tremendous team effort by AWS to make our server and network equipment last longer,” he added.

Amazon counted big wins for AWS including deals with Nasdaq, automaker Stellantis, electronics retailer Best Buy and Facebook parent company Meta.