Amazon's profit soars

The Seattle company announced Thursday a profit of 2.53 billion dollars in the second quarter. earlier. That's three consecutive quarters of earnings of more than a billion dollars, and extends Amazon's profitability trend over three years. Amazon is no longer known to suffer losses or produce such a thin income by plowing every dollar that it brings in investments. Yet other tech giants like

Alphabet
Inc.

and

Microsoft
Corp.

"They are paying more attention to the investment community, where in the past they seemed more focused on the long term," said Christian Magoon, CEO of Amplify ETF and Portfolio Manager of the company. 39, a fund whose investments Amazon.fr

The blockbuster area of ​​Amazon contrasts with that of Facebook Inc., which announced Wednesday that its growth was slowing, dropping its stock by 19% Thursday. This was a reminder to investors that the growth of tech titans is not always guaranteed.

Amazon faces its own challenges. President Trump has once again tweeted a threat to the company, expressing his belief that Amazon is taking advantage of the US Postal Service, which he calls his "deliveryman". Some members of Congress have expressed concern over the growing size and power of Amazon. Many of the President's tweets have sent stocks down on fears of stricter regulation or even antitrust measures.

None of this slows Amazon down, although its quarterly $ 52.89 billion business figure underperformed Wall Street, coming a bit below estimates, although it has risen by 39%. And its forecasted $ 54 billion to $ 57.5 billion in the third quarter is also lower than analysts' consensus estimates.

But the star of the period was the profitability of Amazon. Its operating margin was 5.6%, a big leap from the second quarter of last year and the highest rate in more than a decade.

On a media call, Chief Financial Officer

Brian Olsavsky

credited profitability to a combination of fiscal discipline and growth in service activities. "But it's been more than that," he said. "We have seen greater efficiency than expected in a lot of our expenses, in warehouses, data centers and also in areas such as marketing." The company has also reduced its growth and expenses. "This is turning into a great operational efficiency," said Olsavsky

. The results pushed stocks to $ 3.866, up 3.2% in after-hours trading. Before the late afternoon report, the stock was up 55% this year and its market value was close to $ 860 billion. The only company that is worth more is

Apple
Inc.,

Amazon dominates e-commerce and is now expected to pull about half of every dollar spent online in the United States. But the online store of his retail business is estimated at about $ 946 billion. growth slows – revenues rose 12% to $ 27.17 billion, a smaller increase than in recent quarters. The company is looking elsewhere for expansion, moving the segment's overall business share from this segment to about half.

Although Amazon sells a large number of products that consumers find on its website, millions of small businesses, retailers and manufacturers of the rest. Approximately 53% of the products sold during the quarter came from independent dealers at the site, which contributed to profitability.

The company receives about 15% of these sales. It also offers the opportunity for products to be eligible for Prime delivery via its network of warehouses for additional fees. It's usually cheaper than Amazon to hold its own inventory.

The acquisition of Whole Foods Market by Amazon, completed in August, added a new revenue stream from physical outlets. Amazon reported $ 4.31 billion in revenues from brick and mortar stores. In May, Amazon added Prime benefits to Whole Foods stores, including 10% off items and other special offers for juice sales.

The addition of these benefits has allowed Amazon to increase the price of its members. at $ 119 a year. More than 100 million Amazon users are now Premium members, enabling unlimited two-day delivery, video content and other benefits, and helping to retain customers who typically spend two times more than a non-member.

Amazon Web Services, maintained its pace of growth, reported revenues increased 49% to $ 6.1 billion. The division's revenue growth has accelerated three consecutive quarters after the narrowing, despite stronger competition from rivals, including Microsoft and Google Alphabet in recent months. AWS 'offerings, including machine learning, artificial intelligence and analysis, have proved popular for clients, says Olsavsky.

Amazon is also taking some digital advertising business, albeit small, away from Google and Facebook. site. The advantage of Amazon is that it can tell advertisers when a consumer has bought a product, showing the effectiveness of an advertisement. Amazon also attracts spending that would traditionally have occurred in brick and mortar stores to ensure proper placement of tablets.

"Coming back, it's now a multi-billion dollar affair for us," Olsavsky said.

The hundreds of thousands of customers who buy ads include merchants and brands that sell on the site, as well as authors and other advertisers who want to reach Amazon's customers. The company will continue to automate the process and invent new products.

The "other" category of Amazon, mainly derived from advertising, more than doubled from the previous year to reach 2.19 billion dollars.

"The amount of business they do creates room for a lot of investment," says Stephen Lee, founding director of Logan Capital Management, which owns the shares of one company. of its funds. "The numbers have become so big, even substantial investments are not worth the money and profitability it was."