Amazon steps up growth with services

In the third quarter of the year Amazon stepped gorwht that had been lagging for a couple of quarters. The old business of the company, product sales, returned back to growth. It was the service business that once again led the growth of the company. Services recorded a 21,1% sales increase compared to 8,1% for product sales.

Services account for 53,3% of total revenues for the company.

Within services the fastest growing parts were Advertising and 3rd party services. For the Last Twelve Months (LTM) Advertising brought in $35,9 billion in very profitable revenue for the company. That is already 47% of the revenues brought in by AWS.

Advertising is soon becoming the second big profit engine for Amazon alongside AWS.

In terms of the business segments, the oldest segment, North America, reversed the declining trend of its sales growth with a respectable 20% growth. Not bad for a 25+ year old business segment.

International business remains the burden for Amazon. The revenues declined for a fourth quarter in a row and the losses widened. The share of revenue coming from the International segment dropped to record low 21%.

The growth and profit engine of the company, AWS, is starting to show some signs of slowing down. The operating margin of AWS has come down from the highs of 2021 to a historically more normal levels of 26+%. However, also the growth of the business unit has declined. The growth of 27,5% is the lowest level since the start of 2017 for AWS.