Date
17 October 2018
Amazon has announced a record second-quarter profit as its cloud business continues to post robust growth and ad sales keep rising. Photo: Reuters
Amazon has announced a record second-quarter profit as its cloud business continues to post robust growth and ad sales keep rising. Photo: Reuters

Amazon earnings top forecasts on cloud computing, ad growth

Amazon.com on Thursday reported a second-quarter profit of US$2.5 billion, more than double the forecasts of analysts, on strong cloud computing and advertising operations.  

Amazon Web Services, the company’s cloud division, posted a 49 percent rise in sales to US$6.1 billion, beating the average estimate of US$6 billion, Reuters reports.

Highly profitable ad sales were another bright spot in the three months to June. According to the company, revenue from the category and some other items grew 132 percent to US$2.2 billion. 

Looking ahead, the world’s largest online retailer said it expects operating profit between US$1.4 billion and US$2.4 billion for the third quarter, up from US$347 million a year earlier. 

“A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising,” Brian Olsavsky, Amazon’s chief financial officer, said on a call with media.

“We’ve seen a greater-than-expected efficiency in a lot of our spend in things like warehouses, data centers, marketing,” Reuters quoted him as saying.

Younger, higher-earning businesses, including cloud computing and advertising, along with a July event the company created to drum up sales during the summer shopping lulls, are helping Amazon overcome high costs in the third quarter.

Amazon said the Prime Day event in July saw members purchase more than 100 million products.

The company said it now expects third-quarter sales of between US$54 billion and US$57.5 billion, up from US$43.7 billion a year earlier.

Even more crucially, more people joined Prime on July 16 than on any previous day in the company’s history, Amazon said.

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

Total net sales for the second quarter were up 39 percent at US$52.89 billion. 

While it fell short of Wall Street expectations, the overall result came as a relief for the tech sector, which had been reeling from a profit-warning Wednesday from Facebook.

Amazon shares rose more than 3 percent in after-hours trade following the results announcement.

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RC

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