Amazon shares soar on big 1st quarter earnings
Company’s core e-commerce sales and its cloud computing division pushed revenue to suprising levels.
Amazon swung to a surprisingly strong profit in the first three months of the year, boosted by its fast-growing cloud business and strong North American e-commerce sales. Shares soared in after-hours trading Thursday, rallying 12.5% to $678.
Unlike other recent tech earnings disappointments such as Apple and Alphabet, Amazon was able to wow Wall Street with profits, even though these pale beside the bottom lines of its major tech brethren.
Momentum came from its core e-commerce sales as well as its cloud computing division, Amazon Web Service, and it gave a revenue outlook that topped forecasts. Expect more great TV shows as a result of those successes, Amazon said.
“The numbers are great,” Forrester analyst Sucharita Mulpuru said. “Overall, the company still has economics that aren’t as strong as other public retailers and are much worse than other established technology companies. That will be their challenge to overcome.”
Net income of $513 million compared to a $57 million loss a year ago. That result amounted to the most profitable quarter for the company, which regularly posted losses years after its late 1990s IPO as it plowed its massive sales machine into spending.
Amazon said earnings per diluted share were $1.07, far exceeding the forecast of 59 cents per share as forecast by analysts polled by S&P Global Market Intelligence. Sales for the Seattlebased company were $29.1 billion, up 28% and also topping analysts’ forecasts of $28 billion.
Amazon’s outlook for the current quarter was net sales of between $28 billion and $30.5 billion, with the average coming above analyst expectations of $28.3 billion. Strong double-digit growth came from its cloud services unit, AWS, despite growing competition from Google and Microsoft. AWS earned $604 million in profit on $2.57 billion in sales, a 64% year-over-year growth.