AWS says growth tumbled in mid-teens to start new year as customer cost-cutting continues • TechCrunch

Yesterday, Amazon reported earnings, with AWS recording modest growth of 20% for the quarter year-on-year to $21 billion. But perhaps even more troubling, the company reported on the earnings call with analysts that growth fell further in the mid-teens for the first month of the new year as cloud continued to slow. general with customers looking for ways to reduce their bills.

“Looking ahead, we expect these optimization efforts to continue to be a headwind to AWS’s growth for at least the next two quarters. So far in the first month of the year, AWS’s year-over-year revenue growth is in the mid-teens,” CFO Brian Olsavsky said in comments. to open the call.

For a division that has enjoyed high growth rates for years, growth in the mid-teens represents an extraordinary downfall, and it did not go unnoticed on the earnings call. Analysts were certainly curious if this was a longer-term trend, but Olsavsky really wasn’t ready to predict beyond this quarter.

“So on the growth rate of AWS, I’m not sure I can predict for you with any level of certainty what’s going to happen beyond this quarter. That’s a bit of uncharted territory economically. And as we mentioned, there are some unique things happening with the customer base and I think a lot of people in this industry are all seeing the same thing,” he said.

It should be noted that Olsavsky also reported an annual revenue rate of $85 billion, suggesting that AWS remains an extremely healthy company despite the economic headwinds it faces. “That said, looking back, our new customer pipeline remains healthy and robust, and many customers continue to put plans in place to migrate to the cloud and commit to AWS for the long term.”

Amazon CEO Andy Jassy, ​​who has spent much of his company career leading AWS, said that as customers look to cut costs, there will be a short-term growth slowdown, but that there was still a lot of cloud market to capture after the slowdown.

“So I think it’s also worth remembering that 90-95% of global IT spend stays on-premises. And if you believe that, that equation will shift and shift. I don’t think on-premises will ever go away, but I do believe that in the next 10-15 years most of it will be in the cloud… This means we have a lot of growth ahead of us in the AWS enterprise “, did he declare.

Maybe, but for a business that has been a growth engine for the company for many years, the current slowdown at AWS must still be worrying.