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Amazon.com Inc forecast strong sales in the fall and posted a profit that was double the Wall Street targets on July 26 due to its younger, more profitable activities, including cloud computing and advertising.
Amazon. Image: Reuters
Shares rose more than 3% in after-hours trading. The report was a relief for investors in the US tech sector, still under a profit warning by Facebook Inc. July 25 that plunged its stock 19 percent.
The Amazon report shows how the world's largest online retailer has learned to offset the high costs of fast parcel delivery and video streaming by controlling spending and creating higher-yielding businesses. He was the first to sell data storage and computational power in the cloud, a bet that continues to reap the rewards and give him the leeway to invest in large projects
. Whole Foods Market stores across the United States in an ambitious attempt to make groceries in the era of online commerce.
Amazon's expenses typically climb in the summer quarter, putting pressure on profits to prepare for Christmas and the winter holidays.
Still, the company expects operating profit of $ 1.4 to $ 2.4 billion, up from $ 347 million a year earlier. The company also announced a profit of $ 2.5 billion in the second quarter, its largest ever recorded.
"A big contributor to the quarter and the last quarters has obviously been a strong growth in our profitability and advertising business," Brian Olsavsky, the chief financial officer of Amazon, said at a call with the media. "We have found efficiencies superior to our spending in areas like warehouses, data centers, and marketing."
Seattle-based company removed hundreds of jobs in its early seat of the year, in a move that may have reduced costs and freed up resources for fast growing areas like Amazon voice help Alexa.
Michael Pachter analyst Wedbush Securities has described the expansion of the company's gross profit margin "remarkable", citing impressive results. He said that Chief Financial Officer Olsavsky noted that third-party sales also changed the profit equation for Amazon. The company has been known for years for roller coaster results.
More lucrative than the sales of goods that Amazon has, transactions with third parties offer the company a commission that increases dramatically when traders choose to deliver their products to Amazon, as many do. Half of all units sold by Amazon come from these vendors and these sales continue to grow.
Angling for Advertisers
Highly profitable advertising sales were positive in the last quarter. The company said revenue for the category and other items rose 132% to $ 2.2 billion. According to Thomson Reuters analysts expected $ 2.1 billion
. Advertiser locations result directly from sales, reaching customers on Amazon with the intention of making purchases. This contrasts with the advertisements that reach the users who are on the industry leaders Facebook and Alphabet Inc. Google
Amazon Web Services (AWS), the most lucrative subsidiary of the company, has seen its operating margin increase a year earlier. Sales also grew 49% to $ 6.1 billion, exceeding the average estimate of $ 6 billion
The success of the unit helped make Jeff Bezos, the director General of Amazon, the richest person in the world.
"It's really the crown jewel of the Bezos empire," said Daniel Ives, an analyst at GBH Insights. "They have invested significant amounts in building the infrastructure, sales force, and ecosystem of AWS partners around the world who are beginning to pay massive dividends."
While its competitors are gaining ground, AWS Percentage of the market in full expansion against 18% for Microsoft Corp and 8% for Google in the second quarter, said the research firm Canalys on July 26th. Amazon shares, up 55 percent this year versus 6 percent for the S & P 500.SPX at the close of July 26, trade at a premium, too. The price / earnings ratio of the action is more than ten times that of Microsoft.
Cloud and advertising sales, as well as a July event created by Amazon to generate revenue during the summer sales, help the company overcome the high costs during the summer. third quarter, Prime Day Amazon has sold more than 100 million products and recruited more people into its loyalty club than any other day in its history. 19659005] First members spend above average on Amazon. The company now expects sales of $ 54 to $ 57.5 billion in the third quarter, up from $ 43.7 billion a year earlier.
The 20% rise in the US annual price in the first quarter seems to have had little negative impact: Amazon Total net sales for the second quarter rose 39% to $ 52.9 billion, excluding the average estimate of analysts of $ 53.4 billion.
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