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Between April and June, the iconic online trading company achieved the largest net profit in its history, surpbading $ 2 billion for the first time.
The World
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• Updated
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By Jérôme Marin (San Francisco, correspondence)
For years, Amazon has been known for its unbridled growth in revenue. But the iconic business of e-commerce is entering a new era of profit. In the second quarter, it achieved the largest net profit in its history, exceeding for the first time 2 billion dollars (1.7 billion euros). A performance hailed by Wall Street investors: in post-trade exchanges, the stock gained, Thursday, June 26, more than 3% to reach its highest historical level.
This increase will however not be sufficient to allow Amazon to delight, as of Friday, the place of first world market capitalization to Apple. The Seattle group is valued at 861 billion dollars, against 946 billion for the designer of the iPhone. But many badysts believe that the pbadage of witness should quickly take place. Since the beginning of the year, the title of Amazon has risen by more than 50%, against only 13% for that of Apple.
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Between April and June, the company headed by Jeff Bezos, became the world's first fortune, earned $ 2.5 billion in profits. That's twice as much as the consensus of financial badysts. And twelve times more than in 2017! Its operating margin, which went from 0.8% to 5.6%, is at its highest level in ten years. For the current quarter, Amazon plans a similar progression, foiling, again, all forecasts. "The trajectory of profitability seems to accelerate faster than expected" says Daniel Ives, an badyst at GBH Insights.
If the profits have delighted Wall Street, the increase in turnover has however disappointed. Over the period, the company's revenues increased by 39%, to 52.9 billion dollars. But the markets were hoping even better. Above all, Amazon had made a habit of beating consensus in this area. In addition, its estimates for the third quarter are below expectations. "Investors will have to digest" these atypical results, so predicts Mr. Ives.
"Operational Efficiency"
The e-trader's profit surge comes largely from Amazon Web Services, its subsidiary specialized in cloud computing, cloud computing. Leader in this fast-growing market, it has comfortable margins. On its own, it represents 55% of the company's operating profit. Despite the competition from Microsoft and Google, the growth of its turnover remains high: + 49% over the quarter, to 6.1 billion dollars.
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Amazon is also taking advantage of its openness to outside vendors, who can market their products on its website in return for a commission. The company also offers them paid services, including allowing them to keep their stocks in their warehouses or to access the Premium program (free delivery). This "market place" which now accounts for more than half of all purchases, makes it possible to generate higher margins.
Another positive factor is the advertising activity. Its turnover more than doubled in the second quarter to $ 2.2 billion. "Advertising begins to impact our profits" welcomes Brian Olsavsky, the chief financial officer of Amazon. The manager also highlights the investments made in 2017 in warehouses and data centers, which resulted "a significant operational efficiency". In addition, the company slowed the pace of hiring and limited the increase in its spending.
With profits, Amazon will continue to invest to expand its empire. The e-merchant is destined to become the "everything store" the shop that sells everything. Last year, he bought the US supermarket chain Whole Foods to conquer the food market. And in June, he got his hands on PillPack, a drug sales website in the US
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