Amazon To Break Out AWS Financials Starting In 2015

Amazon plans to start breaking out its Amazon Web Services financial results starting in the first quarter of 2015.

Brian Olsavsky, vice president of finance for Amazon's global consumer business, announced the change during the Thursday financial analyst call following Amazon's release of its fourth-quarter and full-year 2014 financial results.

The move is a significant change for Amazon, which until the end of the full year 2014 had lumped the AWS financials together with advertising services and co-branded credit-card agreements in its North American market, making it hard to gauge Amazon's public cloud business.

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Thomas Szkutak, senior vice president and CFO, who is expected to retire in June and be replaced by Olsavsky, said in response to an analyst question at the conference call that the time is right to break out the AWS numbers.

"We just think it's an appropriate way to look at our business in 2015," Szkutak said.

When asked about the outlook for AWS' pricing in 2015, Szkutak replied that lowering the price for the service has been a big focus since it was launched, and that Amazon has done so well over 40 times so far. "It's hard to make predictions," he said.

Another analyst asked whether Amazon's decision to break out AWS financial information is part of a move to increase AWS' SaaS offerings, to which Szkutak said the company declined to talk about future offerings. "The team has done an incredible job in innovation," he said.

Jeff Juszczak, director of information technology at Tampa Bay Tech Solutions, a Tampa, Fla.-based managed services provider and AWS partner, said that as a consumer and provider of AWS, it would be helpful to see the specific financials of AWS.

"I just want to see that the lights stay on at Amazon," Juszczak told CRN. "It will be interesting academically to see the future growth, especially since Amazon now has real competition from Microsoft Azure, but not so much from Google."

Juszczak, however, admitted that while the idea of Amazon breaking out its AWS numbers may not be a big deal now, that could change. "It may be a big story three months from now," he said.

For the fourth quarter of 2014, Amazon's North American "other" revenue, which includes AWS, reached $1.7 billion, up about 43 percent from the $1.2 billion reported for the fourth quarter of 2013. Full year 2014 "other" revenue reached $5.4 billion, up about 45 percent over the $3.7 billion reported for 2013.

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Overall, Amazon reported revenue of $29.33 billion in the fourth quarter, up 15 percent from the $25.59 billion it reported in the third quarter of 2014. The company reported income of $214 million, or 45 cents per share, down from the $239 million, or 51 cents per share, it reported a year ago.

For the full year 2014, revenue was $88.99 billion, up about 20 percent compared to the $74.45 billion it reported for 2013. Amazon reported a loss of $241 million, or 52 cents per share, compared to last year's profit of $241 million, or 59 cents per share.

Amazon, in a look back at 2014, said it had more than 515 significant server and feature releases in 2014, which was up 80 percent over the number released in 2013, and that AWS usage growth was close to 90 percent year-over-year in the fourth quarter.

This included Amazon Aurora, a MySQL-compatible database engine for Amazon Relational Database Service; AWS Lambda, a compute service that runs developers’ code in response to events and automatically manages the required compute resources; new AWS cloud services including AWS Key Management Service, AWS Config and AWS Service Catalog; AWS CodeDeploy, a managed deployment service Amazon EC2; and Amazon EC2 Container Service for running and managing distributed applications using containers on AWS.

Also new this month is Amazon WorkMail, a new enterprise email solution compatible with Microsoft Outlook.

That kind of release schedule is big news, Juszczak said.

"When I go to the AWS console, there's another new icon or two with new offerings every month," he said. "Recently, we got Amazon Directory Services, which is like Microsoft Active Directory. That's huge for us. We don't have to run domain controllers in the sky any more. Now we get our own domain controller for about $30 per month."

The number of features and services AWS added in 2014 is so big that it would be scary if it were any other company that made so many changes, Juszczak said.

"I'd be frightened that the company was getting too broad," he said. "But Amazon ties everything together. I can get a cheaper virtual server from Digital Ocean, but I can't easily link it to other services. Our customers need more than another server. Our business is based on replacing the things customers would do if they had their own infrastructure. With other providers, I can replace a server. But with Amazon, I can replace the entire infrastructure."

PUBLISHED JAN. 29, 2015