Amazon Forecast Shows Internet Giant Can Grow Profitably

Amazon reported larger profits in the first quarter than expected and forecast more of the same, delivered by its cloud-computing, subscription and advertising businesses, according to Bloomberg.

The results highlight Amazon’s evolution from a low-margin retailer into an expansive provider of profitable services over the internet. The company 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 of operating income and sales of $52.3 billion.

The results eased concern about criticism by U.S. President Donald Trump, who dented Amazon shares last month with a series of tweets saying the company should pay more for postal services and contribute more in taxes. Amazon shares jumped about 6 percent in extended trading following the report. The shares are up about 30 percent so far in 2018.

Amazon reported first-quarter profit, excluding certain items, of $3.27 a share on sales of $51 billion, up 43 percent from a year earlier. Those results also exceeded analysts’ expectations. Revenue from Amazon’s "other" category, which includes advertising sales, more than doubled to $2 billion in the first quarter. Sales for Amazon Web Services jumped 49 percent to $5.4 billion. It’s the second straight quarter of accelerating growth for the profitable unit. Subscription services, which include Amazon Prime, generated revenue of $3.1 billion, up 60 percent from a year earlier.