Advertisement

Amazon’s earnings and forecast beat expectations, and its stock jumps 6% in extended trading

Amazon has more than 100 million Prime subscribers, its CEO said recently.
(Mark Lennihan / Associated Press)

Amazon.com Inc. forecast second-quarter profit that topped analysts’ forecasts, buoyed by swelling ranks of Prime subscribers and a profitable cloud-computing division that’s winning more corporate customers.

The world’s largest online retailer projected operating income in the current quarter of $1.1 billion to $1.9 billion on revenue of $51 billion to $54 billion. Analysts estimated operating income of $1.13 billion and sales of $52.3 billion.

Amazon shares jumped more than 6% in extended trading after closing at $1,517.96. The stock is up about 30% this year.

The outlook reinvigorated enthusiasm for Chief Executive Jeff Bezos’ strategy of leaving rivals in the dust by constantly investing in growing businesses such as data centers, voice-activated devices and faster delivery of more goods. A series of critical tweets from President Trump about sales taxes and U.S. Postal Service rates briefly blunted its stock market momentum this year. Thursday’s report suggests Trump’s tirades are minor speed bumps, not big obstacles.

Advertisement

“Operating performance is secondary to all of these other things going on,” Tom Forte, an analyst at DA Davidson & Co., said before the results.

Amazon reported first-quarter profit, excluding certain items, of $3.27 a share on sales of $51 billion, up 43% from a year earlier. Those results also beat analysts’ expectations.

First-quarter sales for Amazon Web Services, the company’s cloud-computing division, jumped 49% to $5.4 billion, excluding currency fluctuations. It was the profitable unit’s second straight quarter of accelerating growth.

Subscription services, which include Amazon’s popular Prime offering, generated revenue of $3.1 billion, up 56% from the year-earlier quarter.

Advertisement

Bezos recently reported that the company surpassed 100 million Prime subscribers who pay yearly or monthly fees in exchange for fast shipping and other benefits such as video and music streaming. The announcement signaled that the membership strategy that has helped Amazon dominate e-commerce in the U.S. could be replicated overseas. Amazon has been losing money on its international expansion, with investments in India, Australia, the Middle East and Latin America.


Advertisement