Online giant Amazon has become the latest US tech firm to report blowout earnings after its profits tripled on the back of soaring sales, sending the stock up almost 5% in after-hours trading to $3,648.
The company smashed expectations overnight with profit of $8.1 billion for the three months to the end of March, compared to $2.5 billion a year ago. Earnings per share came in at $15.79 compared to the $9.54 expected.
Operating profit soared 122% to $8.8 billion as revenue jumped 44% to $108.5 billion, which according to analysts exceeded market expectations by 17% and 4% respectively.
The numbers come in a huge week of earnings for the American tech giants, with both Google-owner Alphabet and software titan Microsoft beatings market expectations with their latest quarterly earnings, while electric carmaker Tesla disappointed despite its earnings beat, which was poor quality having come from Bitcoin not cars. Apple and Facebook have also reported strong sales increases.
AWS DRIVES EARNINGS BEAT
The division of Amazon that Wall Street analysts focus on the most, and the one which drives the share price, is its public cloud division AWS.
The unit certainly played its part for Amazon, with operating profit up 35% to $4.16 billion on revenues up 32% at $13.5 billion, which comes after three quarters of high 20s revenue growth.
Analysts at Megabuyte said Amazon’s March quarter is ‘always relatively subdued’ following the December quarter, but added that the $761 million of incremental revenues was, for example, almost three times that added in the same quarter last year.
Major wins for AWS during the period included DISH’s 5G Open Radio Access Network in the US and Disney’s global streaming service, as well as accelerating demand from enterprises moving to the Cloud, triggered by COVID.
Megabuyte said that on the analyst call, Amazon disclosed a backlog of $52.9 billion in AWS with an average three year life, up 55%.
GROWTH IN ALMOST ALL AREAS
Amazon took a $2 billion hit from Covid and expects further costs of $1.5 billion, but that failed to put a dent in earnings as it recorded growth in almost all areas, including its core online retail offering, while the number of streaming hours on Prime Video surged 70% year-on-year.
The only area that disappointed was its physical stores revenue, which includes Whole Foods Market and other brick-and-mortar offerings such as Amazon Books, continued to fall. Sales slumped 16% to $3.9 billion. The category excludes online delivery.
While for investors concerned that business could slow for Amazon in a post-pandemic environment, the company said it expects to post revenue between $110 billion and $116 billion in the next quarter, surpassing Wall Street’s projection of $108.6 billion.
