While many businesses have struggled to come to terms with the implications of the Covid-19 pandemic, Big Tech continues to thrive with Amazon, Apple Facebook and Google all posting record quarterly revenues as they announced their latest financial results on so-called ‘Super Thursday’.
Amazon, Facebook and Alphabet, Google’s parent company, all reported their best-ever quarterly financial performances. Apple’s quarterly revenue of $64.7bn was its strongest ever performance for the three months ending in September.
All four exceeded analyst expectations, between them reporting eye-watering revenue of more than $220bn in the quarter. This is roughly equal to the International Monetary Fund’s GDP forecast for Portugal this year.
Amazon enjoyed the highest revenue of the four, announcing income of $96.1bn, up 37% year-on-year and beating analysts’ expectations.
The e-commerce behemoth has taken advantage of the surge in demand for home deliveries during the pandemic, and has now posted record revenues in each of the past two quarters, ahead of what is traditionally its most lucrative period in the run-up to Christmas.
With cloud computing spend accelerating during the pandemic, you might have expected a spike in AWS revenue to show up in the Amazon earnings report.
But growth has stagnated in 2020, with AWS reporting quarterly income of $11.6bn, 29% up year-on-year. While this is not insignificant, it represents the same level as the previous quarter, and continues a general slow-down in AWS revenue growth, which is now at its lowest rate since Amazon started breaking out AWS earnings in 2017.
While this is perhaps to be expected given that the platform is established as the market leader, ahead of rivals Google Cloud and Microsoft Azure, the heightened interest in public cloud might have been expected to induce a bigger revenue uptick.
“Cloud is a mixed bag right now,” Amazon CFO Brian Olsavsky said on a call with investors, pinpointing “anomalies in different industries” as the reason for this.
He added: “We’re very happy with the cloud performance, and we’re seeing a lot of customers who are now moving to cloud at a faster pace. They’ve accelerated their plans.”
AWS remains a relatively small part of Amazon’s empire, accounting for 12% of the company’s revenue.
Is Amazon ready for the Christmas rush? Maybe…
While all appears to be rosy in the Amazon garden, with the company expecting to comfortably break the $100bn revenue mark in Q4 (guidance is $112-$120bn), Olsavsky said fulfilling the anticipated spike in orders, with the pandemic driving even more consumers to buy gifts online, will be a challenge.
“It’s going to be tight for everyone, we’ll all be stretched,” he said. “It’s advantageous to the customer and probably to the companies for people to order early this year.”
He added that Amazon has increased its fulfilment and logistics capacity by 50% this year in a bid to cope with the upcoming rush.
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