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July 29, 2016

Alphabet and Amazon report strong financials

News: Cloud growth continues for Amazon Web Services plus Oracle numbers

By James Nunns

Amazon Web Services again stole the show as parent company Amazon reported its Q2 financial results.

The cloud giant saw net sales hit $2.9bn in Q2, up from $2.5bn from Q1 and up $1.8bn from a year ago.

Net sales in Q1 were up 64% year-over-year, this fell slightly to 58% from Q1 to Q2. Operating income meanwhile stood at $718m, up 135% over £305m in Q2 2015. Operating expenses stood $2bn, up 41% over $1.4bn in Q2 2015.

What this means is that AWS has more than doubled its year-ago income and shows little sign of slowing down despite increased competition from its rivals in the market Microsoft Azure, Google Cloud Platform and Oracle.

Amazon reported revenue up 31% from last year to $30.4bn with profit standing at $857, compared with $92m in 2015.

Alphabet, the parent company of Google, released its earnings but as it doesn’t offer specific numbers for its cloud business, like Microsoft, it is a little difficult to tell how well it is actually doing.

Microsoft says that annual run rate for Azure is $10bn and expects that to grown to $20bn by 2018.

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Google meanwhile increased its revenue by 21% over last year in its Q2 results bringing revenue to $21.5bn.

Net income was just shy of $5bn at $4.9bn, up from $3.9bn a year ago.

The vast majority of this revenue came from Google, $21.3bn, the other parts of Alphabet only contributed $185m, showing that advertising is still going strong as this grew 19% to $19.1bn.

What is difficult to see is exactly how well the cloud business is doing under the new leadership of Diane Greene, EVP of Google Cloud Enterprise.

Alphabet lists Google Cloud Platform under “Google other revenues” segment along with Google Apps line, Google Play, and hardware. This category brought in around $2.2bn, up 33% from Q2 2015, but there is no solid evidence as to whether that is due to cloud growth.

Amazon meanwhile is happy to report the AWS financial results separately, perhaps because it is doing well and continuing to expand.

Oracle is another company that is happy to report its financial results for cloud with total revenue increasing 49% to $895m for Q4. While this may not be raking in as much money as AWS is, it is certainly growing at a very healthy rate.

The company has also bolstered its cloud portfolio with the acquisition of NetSuite for $9.3bn.

Mark Hurd, CEO, Oracle, said: “Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever.

“We intend to invest heavily in both products—engineering and distribution.”

The acquisition could significantly boost Oracle’s plans to surpass Google, Azure, and AWS in the cloud market but the company still has a long way to go.

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