Amazon second-quarter profit trounces estimates

Amazon second-quarter profit trounces estimates

Amazon second-quarter profit trounces estimates

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. Amazon, however, was the exception.

For the three months ending June 30, Seattle-based Amazon reported net income of $2.53 billion, or $5.07 per share, blowing past the $2.48 per share Wall Street analysts expected, according to FactSet.

Amazon's stock inched up 4.1pc in after-hours trading, with its market cap of $877bn bringing the business closer to becoming the first $1 trillion company.

A much-overlooked bit in Amazon's earnings press release on Thursday - in which Amazon said "we want customers to be able to use Alexa wherever they are" - has one Macquarie analyst speculating that the e-commerce giant could be planning another foray into phones.

While top tech rival Facebook faces the aftermath of the biggest loss in Wall Street history, shares of Amazon marched higher Thursday after it bested analysts' expectations.

Outside of retail, Amazon's Web Services unit - which provides cloud computing services to companies and government - has been a strong source of income and has helped offset the high costs associated with running its online store. The company saw strong growth - particularly on the bottom line - in all its business segments.

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. Its North American retail business specifically fared well.

The latest update showed an operating profit of US$1.8 billion for its North American operations, offset in part by an operating loss of US$494 million in its expanding global segment.

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According to the research firm eMarketer, Amazon's e-commerce revenue will grow more than 28 per cent this year to reach US$394 billion, and will account for 49 per cent of U.S. online retail sales and almost five percent of all retail spending. It posted an operating profit of $1.64 billion, up from $916 million a year ago.

Olsavsky outlined some factors influencing that change in growth rate, the first being that Amazon had very strong unit growth previous year in Q2, so it was tougher comparison. Amazon's "other" revenue, which is largely comprised of ad sales, grew a whopping 132% in the quarter to $2.2 billion.

But the company also did well on the cost front.

While the company's fulfilment costs surged almost 54% in the quarter, all of its other costs - fulfillment, marketing, technology, administrative - grew much slower than its sales.

Amazon continued to improve its worldwide performance, which largely comprises India, in the June quarter, after reversing the trend of ballooning losses in the first quarter.

The company also benefited from dramatically lower taxes in the quarter.

On the call, Olsavsky noted that Amazon slowed the pace of its hiring in the second quarter and markedly decreased its build-out of new fulfilment centers. In the period, despite its windfall profit, the company allocated just $74 million for taxes, compared with $467 million a year ago.

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