Revenue Surges as Retail and Cloud Businesses Rule at Amazon

Amazon.com Inc.’s cloud computing and retail sales increased during its first quarter coming in slightly above expectations on Wall Street and sending shares at the company to a new record high in afterhours extended trading.

The largest online retailer in the world said Thursday that net sales increased 23% to over $35.6 billion, beating the average estimate by analysts of $35.4 billion.

Additional fees from its Prime shopping club as well as its media streaming services plus its advertising revenue growth, helped boost its latest results.

Profit, which in the past has been fleeting as the company placed more focus on growth, came in ahead of estimates. Net income was up 41% to end the quarter at $724 million equal to $1.47 per share, which marked the eighth consecutive quarter the company posted a profit.

Analysts were expecting per share earnings of $1.12.

Revenue at Amazon has surged of late as shopping is moving from brick and mortar locations to online and companies are moving computing operations to its cloud, where its Amazon Web Services is the leader. AWS represents the majority of the operating profit at the company.

Some investors have worried that increased competition from other cloud providers such as Microsoft and cuts in prices at AWS would drag on momentum of the company.

Many were also expecting the staggering number of investments by Amazon from warehouses, movie and television production to artificial intelligence and research to weigh profits down.

However, those concerns have proved unfounded during the first three months of 2017.

Shares at Amazon increased 3.9% in trading afterhours adding close to $3 billion to CEO Jeff Bezos’ personal fortune.

Amazon Prime offers faster shipping as well as video streaming to its members, helped increase the subscription sales at the company 49% from the same period one year ago to over $1.9 billion.

Sign-ups are the key to the strategy of Amazon because Prime entices shoppers to buy more and buy more often.

Revenue from its credit card, which is co-branded, and from sellers who are third-party paying to promote their own products on Amazon also increased 56% ending the quarter at $850 million.

Amazon’s operating loss was $481 million for its international unit. The company said it was investing over $5 billion in India to win more market share, while in April it also announced new plans for an Australia based retail marketplace.

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