Amazon.com Inc. reported a quarterly profit that surpassed analysts' estimates, showing that the company's focus on cloud computing, advertising and other high-marginal businesses continues to pay off.
However, e-commerce giant forecasts for the current quarter did not outperform projections, soothe enthusiasm, and boosted all that Amazon is in another high-cost cycle to revive growth. Shares were little changes in expanded trading after results.
Earnings in the first quarter amounted to $ 7.09 per share, the company said in Seattle on Thursday. Analysts forecast a $ 4.67 share. Revenues earned 17% from the previous year to $ 59.7 billion – according to an average estimate by analysts made up of Bloomberg.
The retail store has been polluted in recent quarters by increasing sales in cloud computing, digital advertising and third party vendors on the Amazon retail site, all of which are more profitable than the central online business of the company.
"The bottom line is almost doubling," said Brent Till, an analyst at Jefferies LLC. "And everyone thought this was a story that could only grow and grow and not produce profits."
The gross margin of the Amazon in the period ended March 31 was a record 43 percent.
While profits were higher than the street expected in the first quarter, the forecast for Amazon's $ 3 billion operating income in the current period did not exceed the estimates, signaling the potential for cost increases.
Chief Financial Officer Brian Olsawski said the company overestimated how much it would spend on employment in the first quarter. Those costs, he said, "will go to the back of the year".
Costs for technology and content, mainly related to research and development wages, as well as storage costs, packets and inventory ships, have grown at a slower pace than in the last quarters. The number of employees in Amazon increased by 12 percent to 630,600 employees.
"They somehow took advantage of previous investments, but now they are caught," said Aaron Kessler, an analyst at Raymond James before the company's results are announced.
Chief Executive Officer Jeff Bezos has been pumping most of the cash generated from Amazon's operations back into new initiatives for years. This led to a remarkable increase in revenue, but a little income for investors. Now, with quarterly sales growth of less than 20 percent for the first time since 2015, shareholders are demanding greater profits, much of which comes from the Amazon web services department, which leads the growing market for the sale of computing power and storage the data.
AWS gained almost 42 percent from the previous year to 7.7 billion US dollars. The operating income of the unit was $ 2.2 billion, half of the total Amazon.
Sales in the Amazon's "other" segment, which is mainly advertised, increased by 34 percent to 2.72 billion. The company's digital advertising franchise has grown to the third largest in the United States, lagging behind only Google and Facebook Inc., Alphabet AD, estimates of EMarketer.
Growth in these segments means more predictable income, which is a contrast to the Amazon retail business. That gives investors confidence the company can continue to expand its profitability, even when modern tech giants such as Alphabet and Facebook see their margins, Thill said.
Amazon also kept the cost of shipping, a key element for a company that is known for package delivery, which stood at $ 7.3 billion in the quarter. It is a gain of 21 percent from the previous year, but much less than the pace of increases seen in recent years.
The company began to encourage people who pay for Amazon Premier membership and its free two-day shipping contracts to group their orders for one day. It helps Amazon to consolidate expensive deliveries. Olsawski said the company will spend $ 800 million in the current quarter to receive prime time packages for a day in two.
Losses dropped significantly in the Amazon international unit. The company, which spent a lot in trying to grab the market share in India's new online retail sector, was ruled by regulations that limit the ability of foreign market operators to take a stake with local merchants or exclusive ink deals with local vendors.
Amazon's international operating loss reached $ 90 million compared to $ 622 million in the previous year.
Shares closed in US $ 1,902.25 in New York and jumped 27% this year.