AMZN Amazon.com Inc

By Greg Bensinger 

Amazon.com Inc. swung to a better-than-expected first-quarter profit -- its largest ever for a quarter -- as the company benefited from surging growth in its Web services division.

The Seattle online retailer reported a profit of $513 million, or $1.07 a share, reversing its year-ago loss of $57 million, or 12 cents per share, and topping the $482 million earned in the fourth quarter, its previous best-ever quarter. Analysts were expecting a profit of 58 cents, according to the average estimate compiled by Thomson Reuters.

Sales of $29.13 billion, up 28% from a year ago, surpassed Amazon's own forecast of $26.5 billion to $29 billion and analysts' expectations of $27.98 billion.

The Seattle online retailer was boosted by its Amazon Web Services cloud computing division, where sales surged 64%. The AWS unit, which rents computing power to a variety of startups, government agencies and other corporations, has become a major driver of sales growth and profits for Amazon.

Shares of Amazon, up 40% over the past year, jumped 12% to $671.58 in after-hours trading.

For the current quarter, Amazon expects sales between $28 billion and $30.5 billion, up between 21% and 32% from a year ago. Analysts, on average, were expecting sales of $28.33 billion, according to Thomson Reuters.

Though Amazon has won over Wall Street by consistently bringing in billions in new sales each quarter, it still suffers from a reputation as a profit miser as it plows most of its collected money into product development, hiring and warehouse development. But the company has delivered profits in four straight quarters, including its largest profit ever last year, while demonstrating some spending restraint.

Amazon continues to build new warehouses and streamline shipping and logistics operations, including making more of its own deliveries by truck and plane as it challenges United Parcel Service Inc. and FedEx Corp. Amazon also is working to bring in new members to its Prime unlimited shipping service with proprietary television content and monthly-plan offers released just earlier in April.

AWS sales were $2.57 billion, up from $1.57 billion a year ago and above the average analyst estimate of $2.54 billion on FactSet. Operating profit, before stock-based compensation, increased to $716 million from $265 million.

Chief Executive Jeff Bezos has said he expects AWS to reach $10 billion in sales this year, even as Microsoft Corp., Alphabet Inc. and others ramp up pressure.

Amazon still spends heavily to get its inventory to customers. It reported shipping costs rose 42% to $3.28 billion.

Rival eBay Inc. on Tuesday posted its first uptick in sales in five quarters, though the company said its profits slipped, partly because of unfavorable exchange rates abroad.

Write to Greg Bensinger at greg.bensinger@wsj.com

(END) Dow Jones Newswires

April 28, 2016 16:45 ET (20:45 GMT)

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