Amazon Doubles First Quarter Profits

April 26, 2019
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Earnings season is in full swing, and Amazon (NASDAQ: AMZN) is the latest major company to report its first quarter financials. For the period from January 1 to March 31, the ecommerce and cloud services company beat analyst expectations. Growth is being driven by Amazon’s online retail business, cloud services, and device sales.

Amazon’s Growth Shows No Signs of Slowing

The company released details of its first quarter on Thursday afternoon. Net sales were calculated at $59.7 billion, up 17% from $51.0 billion at this time last year.

Profits soared, reaching $3.6 billion, equating to $7.09 per share at yesterday’s trading price. This is more than double the $3.27 per share that was reported by the company a year ago. Amazon has now beat analyst revenue and profit expectations in four consecutive quarters.

Wall Street analysts predicted that the company would report $59.6 billion in revenue, with earnings per share of $4.70.

What’s Driving Amazon’s Growth?

At its core, Amazon is an ecommerce company, with its online shopping division responsible for the majority of sales. However, the company has diversified in recent years, with a robust advertising business and a competitive cloud services business.

The ecommerce side of the business generated $35.81 billion in revenue from the North American market, including both Mexico and Canada. International revenue was reported at $16.19 billion, indicating that there is still significant room for growth in overseas markets, particularly in Europe and Asia.

Amazon Web Services, the division that includes cloud computing, generated revenue of $7.7 billion in the first quarter. This business segment is facing increased competition from both Microsoft and Google, which will force Amazon to allocate more resources in the future. For comparison, Microsoft made $9.6 billion from its cloud services division in the first quarter.

Amazon’s device division is also performing exceptionally well. Fire TV is now being used by over 30 million active customers, although the company declined to say how much revenue this has generated.

Amazon Second Quarter Guidance

Amazon expects sales in the range of $59.5 billion to $63.5 billion in the second quarter. This would represent year over year growth of 13% to 20%. Operating income is likely to be between $2.6 billion and $3.6 billion, compared to $3.0 billion in Q2 2018.

Amazon remains one of the most popular stocks on the market and it’s the third most valuable with $935.76 billion in total market capitalization. Most top analysts still recommend a BUY on this stock, thanks to continued growth and long-term potential.

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