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Amazon earnings top forecasts on cloud computing, ad growth

28 July 2018

Wall Street had projected $2.49 a share, but those numbers might not be comparable; Amazon posted a per-share profit of $0.40 in the second quarter a year ago.

Amazon's spending typically climbs in the summer quarter, pressuring profits as the company prepares for Christmas and the winter holidays, its peak sales period each year.

Amazon's total sales hit $52.9 billion, an increase of 39 percent year over year.

Meanwhile, Amazon Web Services, the company's cloud-computing business, saw sales jump 49% from the second quarter previous year, to $6.11 billion.

Revenue from AWS surged about 49% to $6.11bn, beating the average estimate of $6bn.

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Following the disappointment Wednesday in Facebook's stalling growth in users and engagement in key markets, which led to a almost 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.

Amazon's second-quarter revenue came out slightly below analysts' expectation, but profits blew away estimates largely thanks to its rocketing sales in the North America market and well controlled operating costs.

Hiking the annual USA price of Prime 20 per cent during the second quarter showed few signs of discouraging sign-ups: the company said subscription revenue increased 57 per cent to $3.4 billion.

Amazon's second-quarter results did benefit from a kind of artificial tailwind - the dollar's appreciation against other currencies, which boosted the dollar value of its overseas sales.

Amazon has reported record quarterly profits helped by a rise in online sales and demand for its cloud services.

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Highly profitable ad sales were a bright spot last quarter.

Apparel, in particular, could prove to be a major growth area for Amazon over the medium-to-long term.

"There are now tens of thousands of developers across more than 150 countries building new devices using the Alexa Voice Service, and the number of Alexa-enabled devices has more than tripled in the past year", he said.

Despite the phenomenal numbers for AWS, CEO Jeff Bezos chose to use the quarterly report to talk up another Amazon product: the Alexa virtual assistant and its ongoing efforts to expand both its range of devices and its geographic availability.

One of Amazon's revenue drivers is its Prime subscription service which offers streaming video and music, free delivery and other perks and which has more than 100 million members worldwide. But as online sales grew, so did shipping costs: Amazon spent almost $6 billion mailing out packages in the second quarter, a 31 percent increase from a year ago. Shares had slumped by 3 percent during the regular session, a move some attributed to investor caution toward high-flying technology companies after Facebook warned that its growth was slowing.

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Amazon earnings top forecasts on cloud computing, ad growth