Amazon forecast shows e-commerce giant growing profitably1 min read . Updated: 27 Apr 2018, 09:24 AM IST
Amazon forecast Q2 profit that topped analysts' forecasts, buoyed by swelling ranks of Prime subscribers and a profitable cloud-computing division
Seattle: Amazon.com Inc. forecast second-quarter profit that topped analysts’ forecasts, buoyed by swelling ranks of Prime subscribers and a profitable cloud-computing division that’s winning more corporate customers.
The world’s largest online retailer projected operating income in the current quarter of $1.1 billion to $1.9 billion on revenue of $51 billion to $54 billion. Analysts estimated operating income of $1.13 billion of operating income and sales of $52.3 billion.
Amazon shares jumped more than 6% in extended trading, after closing at $1.517.96 in New York. The stock is up about 30% so far this year.
The outlook reinvigorated enthusiasm for chief executive officer Jeff Bezos’s strategy of leaving rivals in the dust by constantly investing in growing businesses such as data centres, voice-activated devices, and faster delivery of more goods. A series of critical tweets from President Donald Trump about sales taxes and US Postal Service rates briefly blunted its stock market momentum earlier this year. Thursday’s report suggests Trump’s tirades are minor speed bumps, not big obstacles.
“Operating performance is secondary to all of these other things going on," Tom Forte, an analyst at DA Davidson & Co., said before the results.
Amazon reported first-quarter profit, excluding certain items, of $3.27 a share on sales of $51 billion, up 43% from a year earlier. Those results also exceeded analysts’ expectations.
First-quarter sales for Amazon Web Services, its cloud-computing division, jumped 49% to $5.4 billion, excluding currency fluctuations. It’s the second straight quarter of accelerating growth for the profitable unit.
Subscription services, which include Amazon’s popular Prime offering, generated revenue of $3.1 billion, up 56% from a year earlier.
Bezos recently reported that the company surpassed 100 million Prime subscribers who pay yearly or monthly fees in exchange for fast shipping and other benefits like video and music streaming. The announcement signalled that the membership strategy that has helped it dominate e-commerce in the US could be replicated overseas. Amazon has been losing money on its international expansion, with investments in India, Australia, the Middle East and Latin America. Bloomberg