Amazon's quarterly profit tops $2 billion for first time

Oscar PerryJul 30, 2018

"Prime growth remains the key jewel for Amazon going forward", Daniel Ives, an analyst with GBH Insights, wrote in an investor note last week.

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.

Olsavsky said Amazon's global advertising business is also growing at the "same rapid clip year-over-year".

Looking ahead, Credit Suisse sees huge potential upside for Amazon in several newer verticals the company has doubled-down on in more recent years.

Wedbush Securities analyst Michael Pachter called the expansion in the company's gross profit margin "remarkable", citing impressive results from cloud sales and services to third-party merchants on Amazon.

Amazon reported that its AWS division generated US$6.11 billion in revenue for the second quarter, ended 30 June. The company for years was notorious for roller-coaster results.

The North America segment engages in subscriptions and retail sales of consumer products through North America-targeted websites, like www.amazon.ca and www.amazon.com.

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Amazon will capture almost half of all online spending in the US this year, according to EMarketer Inc. Amazon noted that, over the last three months, the cloud service has added an Elastic Container service for Kubernetes, the availability of its DeepLens camera line for machine learning, and the launch of both the Neptune graph database service and the Snowball Edge Computing appliance.

Revenue for the quarter came to $52.89 billion, below the $53.37 billion analysts expected.

Amazon's e-commerce revenue will jump 28% to $394.23 billion this year, and its digital ads sales will surge 58% to $3.37 billion as it becomes more of a threat to Alphabet and Facebook, according to eMarketer.

Olsavsky said Amazon is working on improving automation tools for advertisers and making smarter recommendations for customers. When asked about the deal Thursday, Amazon executives gave no details on its plans for PillPack. "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". In the second quarter of 2018, it grew by only 17%. The deal is expected to close later this year. The stock's price-to-earnings ratio is more than 10 times that of Microsoft.

The retailer leaped a net income of $2.5 billion for the quarter, which translates to $5.07 per share. Those efforts include snagging more well-known brands to selling their wares on Amazon.com, a steady increase in private label fashion products available in the US, and the nationwide rollout of Amazon Wardrobe, a service that allows Prime members to choose up to 8 items for users to try on at home for 7 days until Amazon charges the user. Members spend more than non-members.

Hiking the annual USA price of Prime 20 per cent during the second quarter showed few signs of discouraging sign-ups: the company said subscription revenue increased 57 per cent to $3.4 billion.

Amazon's "other" revenue, which is mostly comprised of advertising sales, came in at $2.2 billion, up 132 percent from past year.

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