Amazon earnings top forecasts on cloud computing, ad growth

Germany Is Amazon's Second Biggest Market

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The retailer's net income of $2.5 billion marked the third consecutive quarter in which its profits exceeded $1 billion.

The Seattle tech giant, whose stock is up nearly 55% so far this year, is scheduled to report second-quarter earnings on Thursday afternoon after the markets close.

Wall Street analysts had forecast Amazon's earnings at $2.50 a share, and revenue of $53.3 billion.

The online giant saw net sales up 39% to $52.89bn (£40.3bn) from $37.96bn (£29bn) a year earlier, driven by a rise in online shopping and higher demand for its cloud services. Sales picked up speed from the year prior, too, rising 49 percent to $6.1 billion and beating the average estimate of $6 billion. More recently, its advertising unit has become a multi-billion dollar business, selling ads to companies that want their products to show up first when shoppers search on the site.

Wall Street analysts cheered the broad-based strength in the results and overlooked the retailer's decision to tap the brakes on its blazing revenue growth for plump profits. Alex DeGroote, a media analyst at Cenkos Securities, told CNBC that it could grow to $20 billion by 2020. In the same quarter in 2017, Amazon had listed profits of just $0.40 per share.

'A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising, ' Amazon CFO Brian Olsavsky said on a call with analysts. Amazon noted that, over the last three months, the cloud service has added an Elastic Container service for Kubernetes, the availability of its DeepLens camera line for machine learning, and the launch of both the Neptune graph database service and the Snowball Edge Computing appliance.

Amazon's cloud business may get much of the attention for bolstering the company's bottom line.

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Nearly like the takeover of a football club, the ongoing saga between Disney and 21st Century Fox has dragged on for a while now. Fox had 21,700 employees at year-end, according to data compiled by Bloomberg, while Disney has 199,000.

But Amazon's eye-popping growth has also led to increased scrutiny over the possibility that the company's market dominance gives it monopoly power.

The dominance of Amazon Web Services has helped get Amazon into the green in recent years, but Amazon's lesser-known advertising business is also playing a role.

The company said it now expects third-quarter sales of between $54 billion and $57.5 billion, up from $43.7 billion a year earlier.

Though Amazon's financial results and forecasts are decidedly more optimistic than Facebook's were, the company has not entirely evaded the increased political scrutiny now facing the US's major technology companies.

During the event, called Prime Day, Amazon sold more than 100 million products and signed up more people to its Prime loyalty club than on any other previous day in its history.

Hiking the annual USA price of Prime 20 percent during the second quarter showed few signs of discouraging sign-ups: the company said subscription revenue increased 57 percent to $3.4 billion.

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