Amazon Posts Another Blockbuster Profit
July 28 2016 - 4:50PM
Dow Jones News
Amazon.com Inc. reported another record profit and its fifth
straight quarter in the black as it continued to reap new sales
from Prime memberships and its relentless push to deliver goods
ever faster.
Revenue gained 31%, helping push Amazon to a new all-time profit
mark, its third straight quarter doing so, helped along by rising
sales at its cloud computing unit.
Shares of the company rose 2.3% to $769 in after-hours
trading.
Amazon appears finally to be delivering on a long-held hope from
investors of consistent profitability. The Seattle company hadn't
had five consecutive profitable quarters since 2012 as it pumped
much of its sales back into product and infrastructure development,
including massive suburban warehouses to feed customers'
appetites.
For the second quarter, Amazon recorded an $857 million profit,
or $1.78 a share, compared with $92 million, or 19 cents, a year
earlier, as sales rose to $30.4 billion from $23.19 billion.
Analysts were expecting a profit of $1.11 a share, according to the
average estimate compiled by Thomson Reuters.
Amazon had forecast sales of between $28 billion and $30.5
billion.
Helping prop up results was the Amazon Web Services cloud
computing division, which rents computing power to other companies.
AWS increased revenue to $2.89 billion, up from $1.82 billion a
year earlier. The unit appears on track to exceed Amazon Chief
Executive Jeff Bezos's goal of reaching $10 billion in sales this
year.
For the third quarter, the company forecast net sales between
$31 billion and $33.5 billion, compared with analysts' views of
$31.63 billion.
Amazon is no longer just the dominating force in online retail.
It overtook Wal-Mart Stores Inc. by market capitalization a year
ago and is pushing into brick-and-mortar with a bookstore in its
hometown of Seattle and several others planned across the U.S. And
the retailer is a major focal point for brands and manufacturers
betting that consumers are willing to buy more goods online like
clothing and food.
And to keep customers using its $99-per-year Prime unlimited
shipping membership, Amazon has fattened the program up with
exclusive streaming television shows and music as well as a
one-hour delivery service for some goods in a number of cities. It
said this month it will offer Prime for the first time to customers
in India, where it has pledged $5 billion in investment since
2014.
Amazon has been casting about to find new ways to contain
shipping costs that have accelerated more quickly than sales in
recent quarters, including a 42% jump in this year's first three
months and 37% in 2015's holiday quarter. For the second quarter,
Amazon reported a 44% rise in shipping expenses to $3.36
billion.
The company has taken over more of its own delivery, including
the expensive final leg of a package's journey, known as the last
mile. It is leasing 40 planes to carry goods and branded bought
truck trailers.
Rival eBay Inc. reported its second straight sales gain earlier
this month and issued a cheery outlook.
Write to Greg Bensinger at greg.bensinger@wsj.com
(END) Dow Jones Newswires
July 28, 2016 16:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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