Amazon's Aussie cloud profit dragged down by increased costs

The Amazon division that provides marketing, sales and data centre services to Amazon Web Services grew its Australian revenue by 170 percent in the last year.

In financial results filed with corporate regulator ASIC for the 12 months to 31 December 2013, Amazon Corporate Services turned over $69.4 million, significantly more than the $25.7 million it posted in the previous year.

But its bottom line was less rosy - the company's net results were pulled into the red by $370,000 due to a number of major increases in costs. In the previous year, it posted a $722,000 net profit.

One factor affecting the results was a 37 percent increase in tax, to $1 million. 

It also forked out $16 million more on salaries, bonuses, share payments and other employee benefits, to a total of $24 million, while depreciation costs grew to $16.6 million over the year compared to $4.8 million previously.

The company also spent $10 million more on occupancy costs, up to $15.7 million.

The costs are likely related to the late 2012 launch of AWS's two availability zones in Sydney.

Onlookers have long tried to pinpoint the exact size of AWS' public cloud business, with limited success. According to research body Canalys, AWS was expected to generate $3.8 billion of revenue globally in the 2013 year.

Amazon Corporate Services' principal activities are sales and marketing of AWS and "to own and operate technology infrastructure equipment that is maintained in co-located centres and used to support and facilitate the delivery of AWS services".

While the ASIC filing states that "all of the company's service revenue is sourced from Amazon Web Services", an AWS spokesperson said the figures don't reflect customer sales.

"Amazon Corporate Services provides marketing and data centre services to Amazon Web Services," a spokesperson said.

"The revenue of Amazon Corporate Services does not represent revenue from customers using AWS services, in Australia or any other region. AWS revenue is only reported as part of the 'other' category on Amazon financial statements."

The revenues are still marginal compared with technology vendors such as HP and IBM, but AWS' upward trajectory is also stark in contrast.

HP Australia posted a significant $270 million net loss for the 2913 fiscal year, despite revenues of $3.3 billion.

Just this week, IBM Australia reported a 34 percent fall in profit to $118 million, and an 9 percent fall in revenue to $4 billion for the 2013 calendar year, according to the AFR.