Amazon posts record $2.5 billion profit as cloud sales growth continues
- by Ricky Curtis
- in Money
- — Jul 28, 2018
The company posted net income of $2.53 billion in the second quarter - a quarterly record for the company, and a almost 13-fold increase from net income of $197 million in the year-earlier period. That wasn't just a quarterly record for Amazon, but it was almost 13 times bigger than the profit the company recorded in the second quarter a year ago.
Amazon reported net income of $2.53 billion, or $5.07 per share, in the three months ending June 3, blowing past the $2.48 per share Wall Street analysts expected, according to FactSet.
Amazon's quarterly profit soared past $2 billion for the first time, bolstered by continued growth in its online shopping, cloud computing and advertising businesses. Sales picked up speed from the year prior, too, rising 49 percent to $6.1 billion and beating the average estimate of $6 billion.
Its stock is already up almost 72 percent in the past year, and Amazon is getting closer to surpassing Apple as the world's most valuable company, potentially surpassing the iPhone maker in the race to reach a $1 trillion valuation.
While it fell short of Wall Street expectations, the overall result came as a relief for the tech sector, which had been reeling from a profit-warning Wednesday from Facebook.
Revenue grew 39 percent YoY to $52.89 billion, which was slightly lower than the expected $53.41 billion.
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Amazon had a spectacular second quarter by all measures. The cloud division also boastshigher profit margins than Amazon's core retail business. Amazon's "other" revenue, which is largely comprised of ad sales, grew a whopping 132% in the quarter to $2.2 billion. Amazon shares, up 55 percent this year versus 6 percent for the S&P 500 as of Thursday's close, trade at a premium, too. Subscription revenue rose to $3.4 billion, a 57 percent increase over the year-ago quarter.
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.
Apparel, in particular, could prove to be a major growth area for Amazon over the medium-to-long term.
During this year's Prime Day, Amazon said the July event saw Prime members purchase more than 100 million products. 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. The report was a relief to investors in the US technology sector, still reeling from a profit warning by Facebook Inc Wednesday that plunged its stock 19 percent.
While cloud rivals are gaining ground, AWS remains far in front with 31 percent of the fast-expanding market, versus 18 percent for Microsoft Corp and 8 percent for Google in the second quarter, research firm Canalys said Thursday.
