The forecast beat expectations of the cocaine nose jobs of Wall Street adding $8 billion to the net worth of Jeff Bezos, Amazon’s chief executive and largest shareholder.
Amazon Web Services (AWS), which handles data and computing for large enterprises in the cloud, won new business and saw its profit margin expand. It posted a 49 percent rise in sales from a year earlier to $5.44 billion, beating estimates.
Amazon remains the biggest in the space by revenue, and its stock trades at a significant premium to cloud computing rival Microsoft.
Amazon is winning business from older, big box rivals by delivering virtually any product to customers at a low cost, and at times faster than it takes to buy goods from a physical store. It is expanding across industries, too, striking a $130 million deal to stream Thursday night games for the US National Football League online and working to ship groceries to doorsteps from Whole Foods stores nationwide.
Sales jumped 43 percent to $51 billion in the quarter, topping estimates of $49.8 billion.
Amazon’s fast ascent has made it a lightning rod for the ire of Trump. Bezos privately owns the Washington Post, which Trump has described as Amazon’s “chief lobbyist”. Bezos has no involvement in news coverage, the paper’s top editor has said. Trump has also claimed without evidence that Amazon is costing the US Postal Service money and ordered a task force to investigate.
Prime, Amazon’s loyalty club that includes fast shipping, video streaming and other benefits, has been key to Amazon’s strategy. Its more than 100 million members globally spend above average on Amazon.
The company announced Thursday it would increase the yearly price of Prime to $119 from $99 for US members this spring. The fee hike is expected to add a windfall to Amazon’s subscription revenue, already up 60 percent in the first quarter at $3.1 billion.
Brian Olsavsky, Amazon’s chief financial officer, said on a call with analysts that the number of items Prime members can get within two days had grown fivefold since the last price increase four years ago.
Despite the surge in the shopping, Olsavsky gave credit for Amazon’s $1.6 billion profit last quarter to two younger businesses: advertising and Amazon Web Services.
Revenue from third-party sellers paying to promote their products on Amazon.com was an unusually large bright spot during the quarter, with sales in the category, which includes some other items, growing 139 percent to $2.03 billion. This included $560 million from an accounting change.
“Advertising is an important and very profitable bucket of revenue for Amazon and is also growing at a fast rate”, said D.A. Davidson analyst Tom Forte. “They are just getting started here.”
Amazon said it expects operating profit this quarter between $1.1 billion and $1.9 billion, up from $628 million a year earlier. Analysts were expecting $1.01 billion, according to analytics firm FactSet.
Notorious for running on a low profit margin, Amazon has still reaped the rewards for shareholders as it has bet on new services like voice-controlled computing and has expanded across continents and industries.
The company plans to increase its video content spending this year, Amazon’s Olsavsky said, with a prequel to “The Lord of the Rings” in the works. The third quarter will also see extra spending to prepare for the busy holiday season.