Amazon’s Profit Surges on Cloud Computing, Advertising Gains
Amazon.com 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 April 25 in a statement. Analysts had projected $4.67 a share. Revenue gained 17% from a year earlier 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.
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While profit was greater than the Street expected in the first quarter, Amazon’s forecast tempered investors’ enthusiasm. The company projected operating income in the current quarter of as much as $3.6 billion, falling short of estimates, and suggesting Amazon may be spending more than anticipated on its bets for future growth.
“They’ve kind of reaped the benefit of prior investment, but they caught up now,” Aaron Kessler, an analyst at Raymond James, said before the company’s results were posted. Amazon may have to increase investments again to spur future revenue growth, he said.
Shares gained about 1% in extended trading, after closing at $1,902.25 in New York. The stock has jumped 27% this year.
During the quarter, Amazon started encouraging people who pay for Amazon Prime membership and its free two-day shipping perks to concentrate their deliveries in a single day, a move that lets the company consolidate expensive deliveries.
