Amazon discloses some useful data points about the AWS business, which is now up to 16% of total company revenue. Total revenue and operating income are the main metrics shared. One area where there is a lack of visibility is CapEx, of which an increasingly significant portion is now devoted to infrastructure and AWS in general.
The commentary and guidance from management shared on earnings calls provides some directional insight that we can use to make some estimates and discern some recognizable patterns.
One of the main patterns that the numbers reveal is a clear expansion and absorption cycle that looks to be turning over at an increasingly faster rate as the business scales. AWS will incur CapEx and build out aggressively and operating margin takes a hit. But margin then quickly recovers (and even reaches new heights) as the capacity built is absorbed, CapEx spending subsidies and revenue growth accumulates.
This report takes a closer look at the last four years of AWS’s performance to try and understand the current trajectory of profitability and CapEx consumption.