Will Growing AWS Clientele Aid Amazon's (AMZN) Q4 Earnings?
Zacks Investment Research | Jan 27, 2020 09:03PM ET
Amazon’s (NASDAQ:AMZN) fourth-quarter 2019 results, which are scheduled to be released on Jan 30, are likely to reflect its strengthening cloud services offerings.
Amazon Web Services (AWS), the company’s cloud computing arm, holds a dominant position in the cloud computing space owing to solid momentum across customers on the back of its portfolio strength. Moreover, AWS offers strong discounts for long-term deals that help it in attracting customers. These factors are likely to have contributed to its fourth-quarter performance.
Notably, AWS has become an integral division of the company as it generates significantly high margins compared with Amazon’s retail business. We believe expanding customer base is expected to have contributed to AWS’ fourth-quarter top line.
Notably, AWS revenues came in at $8.99 billion, accounting for 12.9% of the net sales in the last reported quarter and surged 34.7% year over year. We further note that AWS operating income improved 8.9% from the year-ago quarter to $2.26 billion.
The Zacks Consensus Estimate for fourth-quarter 2019 AWS net sales is projected at $9.86 billion, indicating an improvement of 32.7% from the year-ago reported figure.
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Growing Clientele to Drive AWS Sales
During the fourth quarter, AWS was selected as the primary cloud provider by ProSiebenSat.1 Media. The latter has decided to automate business by leveraging ML services of AWS.
Further, Western Union selected AWS as its preferred long-term strategic cloud provider. Moreover, Klarna and Old Mutual Limited selected AWS as its preferred cloud provider.
Furthermore, AWS was selected by Seattle Seahawks as its cloud, ML and AI provider. Additionally, FINRA CAT chose AWS as its cloud provider for the Consolidated Audit Trail (CAT). Also, Cerner (NASDAQ:CERN) selected AWS as its preferred cloud, AI and ML provider.
Moreover, Best Western Hotels & Resorts, a global lodging powerhouse, moved infrastructure to AWS in a bid to automate processes and develop more personalized experiences for travelers.
Further, AWS added another customer namely BP (LON:BP) in the to-be-reported quarter. Notably, BP is closing its European mega data centers and moving all data to AWS in order to leverage latter’s ML, analytics, storage, security, databases and compute services.
Hence, the company has witnessed expanding customer base during the quarter under review, driven by portfolio strength.
Moreover, expanding clientele is likely to have driven net sales of AWS in the fourth quarter.
Currently, Amazon carries a Zacks Rank #3 (Hold). You can see Original post
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