Wednesday, 22 August, 2018


Amazon Delivers Record Q2 Profit, While Sales Miss Wall Street Forecasts

Amazon posts record $2.5bn profit fueled by ad and cloud businesses Amazon marches closer to becoming the first trillion dollar company after record profit
Conrad Doyle | 28 July, 2018, 20:32

Amazon said Thursday that it earned$2.5 billion in profit for the three months ending in June, a staggering jump from the $197 million it posted in the same period a year ago.

Amazon highlighted its Alexa intelligent assistant in its quarterly earnings report, touting its expanded calendar features and new information about current events like the Royal Wedding, the 2018 FIFA World Cup matches and the NBA Playoffs.

Amazon Web Services sales hit $6 billion, marking a yearly growth rate of nearly 50 percent, while the segment's profit was $1.64 billion.

Revenue from Amazon Web Services, its profitable cloud-computing division, jumped 49 per cent to US$6.1 billion.

It marked the third consecutive quarter that Amazon has topped $1 billion in profit, a remarkable feat for a company once known for investing so much in its business that it often lost money.

But the company's good news on its bottom-line was tempered by the fact that it missed Wall Street's revenue expectations in the second quarter and projected its sales will fall shy of their previous forecasts in the third quarter.

The company said it expects sales to grow between 23 and 31 per cent in the current quarter. Worldwide sales grew by 27% to $14.6 billion from $11.4 billion in the second quarter.

'A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising, ' Amazon CFO Brian Olsavsky said on a call with analysts.

"In a critical time, Amazon's stellar sales and burgeoning margin expansion helped decouple it from its FANG peers", Instinet, a New York-based equity trading company under Japan's Nomura Group, said in a note to investors. The report may come as a relief to investors in the US technology sector, still reeling from a profit warning by Facebook Inc (FB.O) Wednesday that plunged its stock 19 percent.

The company's "other" category, said to consist "primarily" of advertising services hit almost $2.2 billion in sales for the quarter, up 132% from the same period a year prior.

Amazon's fifth anniversary in June saw founder and world's richest man Jeff Bezos offer cashbacks to Indian customers, as the company also looks to push its payments business.

However, weaker than expected sales growth tempered the results. Amazon sees its revenue for the period to be in the range of $54 billion to $57.5 billion, which is below what analysts are calling for in the range of $55.6 billion to $62.2 billion.

Amazon's momentum has been strong enough to sustain Twitter broadsides from U.S. President Donald Trump, who has accused Amazon of freeloading off the U.S. Postal Service and using the Washington Post as a lobbying tool against antitrust criticism.

Facebook just released earnings this week and reported $13 billion in ad sales in the second quarter.

Amazon is expected to account for roughly half of online sales in the USA this year, according to research firm eMarketer.

Overall, Amazon reported sales of $52.9 billion, up 39 percent from a year earlier.

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