Amazon.com Inc on Thursday said revenue from its cloud business, advertising and subscription services rose in the first quarter, helping it beat profit expectations. The world's largest online retailer said net income rose 41 percent to $724 million, or $1.48 per share, marking the eighth straight quarter that Amazon - known among investors for heavy spending and roller-coaster results - posted a net profit. Analysts on average were expecting $1.12 per share, according to Thomson Reuters I/B/E/S.
Amazon's revenue has soared in recent years, as shopping has shifted online and businesses have moved their IT to the cloud where Amazon Web Services (AWS) is the biggest player. Some investors had questioned if competition and December price cuts by AWS would slow Amazon's sales momentum, or if the company would fall victim to the price battles that are embroiling other retailers.
Not so. The company's total net sales rose 22.6 percent to $35.71 billion, slightly ahead of analysts' average estimate.
"The core e-commerce segment remains very healthy," said Colin Sebastian, an analyst at Baird Equity Research. "Subscription services and advertising are growing much faster, and beginning to move the needle, which also helps increase profit margins."
Amazon Prime, which offers fast shipping and video streaming to members, helped raise the company's subscription sales by 52 percent in the first quarter. Sign ups are key to Amazon's strategy because Prime encourages shoppers to buy more goods, more often.
Sales from AWS, the company's fast-growing business to host companies' data and handle their computing in the cloud, rose 42.7 percent to $3.66 billion, matching the average analyst estimate, according to market research firm FactSet StreetAccount.
Amazon also posted an operating loss of $481 million in its international segment. The company has said it is investing more than $5 billion in India to gain market share, and this month it announced plans for a retail marketplace in Australia.
The company forecast sales for the second quarter of between $35.25 billion and $37.75 billion, which includes an unfavorable impact of about $720 million from foreign exchange rates. Analysts on average had expected revenue of $36.87 billion.
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