Cloud services fuel 118 per cent surge in Amazon profit

Amazon profit surged 118 per cent during the first quarter of this year, from US$1.6 billion to $3.56 billion.

Operating income during the March quarter reached $4.4 billion, compared to $1.9 billion the same time last year. The increases come off the back of a 17-per-cent growth in sales to $59.7.

While the company grew its North American operating income over the period to $2.28 billion, its international division reduced its loss from $622 million last year to a more modest $90 million this year.

Research firm eMarketer estimates that Amazon holds about 47 per cent of the US e-commerce market, which is set to grow 20 per cent to $282.5 billion this year.

EMarketer principal analyst Andrew Lipsman said the quarter was fuelled by the strength of Amazon’s cloud and advertising business, which continues to inflate the company’s margins.

“While AWS’s momentum continues unabated and is clearly the bigger driver of this profit story at the moment, the advertising flywheel now appears to be in full effect for Amazon and will only be a bigger part of the growth story over the near term,” Lipsman said.

Amazon’s AWS segment saw net sales grow 40 per cent year-on-year, from $5.4 billion to almost $7.7 billion, contributing $2.2 billion to the company’s quarterly income.

Looking ahead, Amazon expects second-quarter sales to land between $59.5 and $63.5 billion, representing an annual growth of between 13 and 20 per cent.

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