STAYING ALIVE

Amazon Web Services is the financial life preserver that Amazon desperately needs

Another quarter, another $3.2 billion in revenue for Amazon Web Services.

The e-commerce giant’s cloud-computing division continued to grow at a healthy clip in the third quarter, up 55% from a year earlier, according to results released today. Over the last four quarters, the segment has generated $11.1 billion in revenue, though its quarterly growth has been slowing year-on-year since 2015.

While Amazon is best known as the “Everything Store” of online retail, cloud-computing has become its financial life preserver. As Amazon has matured from a company that consistently loses money to one that the market expects to be profitable, the strong performance of AWS has provided the company with a cushion to keep trying new things. In the three months ended Sept. 30, AWS kept Amazon afloat with $861 million in operating income as the company’s international operations lost $541 million. Overall, Amazon earned $252 million over that period, its sixth straight profitable quarter.

But even as today’s earnings miss sent shares down about 5% in after hours trading, Amazon’s stock has been on a tear since February, and AWS has been a big part of that.

Amazon spent last week reassuring customers that it can safely guard their computing and data after a massive attack on web services provider Dyn took down large portions of the internet. Customers of AWS were among those affected by the attacks, as Dyn is one of the companies that Amazon relies on for so-called domain-name-system services. Shortly after the attack began, Amazon rerouted the DNS services it received from Dyn to other vendors.

Speaking at a Wall Street Journal conference last week, Amazon Web Services CEO Andy Jassy called security “priority zero.” He added that cloud-computing remains the safest option for companies, “given their investment and the number of people and the number of investments they’ve made.”

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