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Amazon earnings top forecasts on cloud computing, ad growth

28 July, 2018, 20:30 | Author: Melinda Barton
  • Amazon just posted an insane earnings-per-share beat

Its growing advertising business is another example of the battle between Amazon and Alphabet-owned Google, which compete across a number of areas such as voice technology, cloud computing, and online shopping. The deal is expected to close later this year. And the e-commerce giant delivered in a huge way - at least, on the bottom line. 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 previous year. That comes out to $5.07 a share, up from 40 cents a share during the same period in 2017 and more than double what outside observers had anticipated.

Olsavsky attributed the company's much better-than-expected bottom line to its ability to hold the line on operating costs and to a boost from its rapidly growing and highly profitable advertising business.

Amazon also offered a more optimistic outlook for its bottom line in the third quarter than analysts were forecasts. And despite sitewide problems during the first few hours of Prime Day, Amazon says small- and medium-size businesses generated $1 billion in sales during the first 25 hours or so of the annual sales event.

Amazon's stock climbed 3.1 percent in after-hours trading. The company said revenue from the category and some other items grew 132 percent to $2.2 billion.

Key to its allure has been that advertisers' placements result directly in sales, reaching customers on Amazon with an intent to shop.

The company during the most recent three quarters pulled in $6 billion in net income, a sum almost equal to its $6.1 billion profit during the prior 21 years. Subscription services revenue, which is mostly from Prime, soared 55 per cent to US$3.4 billion.

Wall Street can't get enough of Amazon (AMZN).

AWS actually accounted for the bulk of Amazon's net income, thanks to $6.1bn in revenues on the quarter and a $1.64bn operating income. Wall Street had been expecting $1.28 billion.

Net income of $2.5bn was up from the meager $197m haul Amazon reported in Q2 a year ago. Amazon also made up for this slight miss with an insane beat on its earnings per share.

"Amazon posted a blow-out quarter by virtually any measurement", Charlie O'Shea, Moody's lead retail analyst, wrote in a note. In the same period a year ago, it earned $0.52 a share.

Amazon has become a frequent target of President Donald Trump, who has claimed the company takes advantage of the US Postal Service and that Bezos is using his personal ownership of the Washington Post newspaper for lobbying.

According to the research firm eMarketer, Amazon's e-commerce revenue will grow more than 28% this year to reach $394 billion, and will account for 49% of USA online retail sales and almost 5% of all retail spending. "They've invested significant dollars in building out the infrastructure, sales force and AWS partner ecosystem worldwide that I think now is starting to pay just massive dividends".



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