Amazon Profits Are Floating High on the Cloud
Amazon reported quarterly profit that exceeded analysts’ estimates, demonstrating the company’s focus on cloud-computing, advertising, and other high-margin businesses continues to pay off.
First-quarter earnings were $7.09 a share, the Seattle-based company said Thursday in a statement. Analysts had projected $4.67 a share. Revenue gained 17% from a year ago to $59.7 billion—in line with the average estimate of analysts compiled by Bloomberg.
The retailer has been buoyed in recent quarters by increasing sales in cloud-computing, digital advertising, and services for third-party sellers on Amazon’s retail site, all of which are more profitable than the company’s central online business.
Shares were little changed in extended trading, after closing at $1,902.25 in New York. The stock has jumped 27% this year.
Chief Executive Officer Jeff Bezos for years pumped most of the cash generated from Amazon’s operations back into new initiatives. That led to prodigious revenue growth, but little income left over for investors. Now, with quarterly sales growth of less than 20% for the first time since 2015, shareholders are seeking greater profit, much of which comes from the Amazon Web Services division, which leads in the growing market for selling computing power and data storage.
AWS revenue gained almost 42% from a year earlier to $7.7 billion. The unit’s operating income was $2.2 billion, or 50% of Amazon’s total.
Sales in Amazon’s “other” segment, which is mostly advertising, increased 34%, to 2.72 billion. The company’s digital advertising franchise has grown into the third largest in the U.S., trailing only Alphabet’s Google and Facebook, researcher EMarketer estimates.
The company projected operating profit of as much as $3.6 billion, falling short of analysts’ estimates and suggesting the company may be spending more than anticipated on its bets for future growth.