Tech

Amazon earnings skyrocket on cloud computing, advertising

Amazon earnings skyrocket on cloud computing, advertising

Revenue soared 39 percent to $52.89 billion in the second quarter, but was below the $53.37 billion analysts expected. It purchased online pharmacy PillPack last month, which followed its US$13.7 billion acquisition of Whole Foods past year to jump start its struggling grocery business.

Amazon, which accounts for about half of the online retail sales in the US, has "the most robust and durable growth outlook" of any company in the FAANG group, which includes Facebook (FB), Apple (AAPL), Netflix (NFLX), and Alphabet's Google (GOOGL), Canaccord Genuity analyst Michael Graham wrote in a note to investors this month.

Amazon Web Services' net sales came to $6.1 billion for the quarter, growing 49 percent year-over-year.

On the downside, Facebook rattled investors when it missed projections for revenue and user growth, raising doubts about the company's growth trajectory.

Amazon's large cloud computing segment, which powers systems for business and government clients, delivered an operating profit of US$1.6 billion.

Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, U.S., January 29, 2016.

"We think we are uniquely positioned to show them the direct benefit of their advertising", Olsavsky added. Amazon's quarterly profit soared past $2 billion for the first time, as revenue from online shopping and its cloud computing business grew. President Trump has been a vocal critic of the company - and its founder's ownership of The Washington Post.

More news: Nikon Full-Frame Mirrorless Camera In Development

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.

Amazon Prime membership will reach 88.7 million viewers in the U.S.in 2018, up 12% from a year ago.

Prime members spend above average on Amazon. Subscription services revenue, which is mostly from Prime, soared 55 per cent to US$3.4 billion. In percentage terms, that's the slowest growth for the first half of the year since the depths of the financial crisis in 2009.

Amazon will capture almost half of all online spending in the US this year, according to EMarketer Inc. But that takes a lot of spending upfront.

While cloud rivals are gaining ground, AWS remains far in front with 31 percent of the fast-expanding market, versus 18 percent for Microsoft Corp (MSFT.O) and 8 percent for Google in the second quarter, research firm Canalys said Thursday.

It wasn't just growing businesses driving Amazon's profitability.


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