Amazon Boosts Earnings and Profit With Help From Cloud Services, Ads

Amazon had a spectacular second quarter by all measures. The firm’s per-share earnings of $5.07 were more than double analysts’ estimates of $2.49, and it had the highest quarterly profit in its history of $2.5 billion.

By nearly every metric, Amazon met or exceeded expectations, and demonstrated the strength of its Amazon Web Services cloud division and revenue from its relatively new advertising service. Both offer higher profit margins than its more traditional consumer-products businesses.

Following the disappointment Wednesday in Facebook’s stalling growth in users and engagement in key markets, which led to a nearly 20% drop in its stock price and over $100 billion in market cap, Amazon regained a small drop during trading hours to return to its previous day’s close in after-hours markets.

After a sizable dip in March and April this year, seemingly related to U.S. president Donald Trump’s criticism of the firm, the company’s stock resumed an almost uninterrupted multi-year climb. The firm market cap is over $850 billion, less than $100 billion shy of high-flying Apple.

Sales skyrocketed for Amazon year over year from $38 billion to $52.9 billion, with a 37% increase after subtracting a favorable impact from foreign-exchange rates in the latest quarter. This revenue increase missed analysts’ targets by half a billion dollars, but the earning per-share muted concerns.

Cloud revenue jumped from $4.1 billion to $6.1 billion year over year, while its category for miscellaneous income, largely comprising advertising, went from $945 million to $2.2 billion. Amazon’s retail store revenue, mostly from Whole Foods, was $4.3 billion, income that didn’t exist in the year-ago quarter.

An increase in the fee from $99 to $119 for Amazon Prime service—which includes free two-day shipping, streaming video programming, and other benefits—didn’t seem to affect its ability to attract renewals and new Prime members. Subscription revenue rose to $3.4 billion, a 57 percent increase over the year-ago quarter.

Amazon faced criticism today from the ACLU over its Rekognition facial-recognition technology, with the civil-liberties firm saying the system identified 28 members of Congress as matching criminal mugshots. Amazon said the ACLU’s test didn’t replicate how its used in law-enforcement investigations, where the service narrows a data set rather than provides a firm match.

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