Amazon.com Inc. doubled its profit in the first three months of 2019, according to a Thursday earnings report, sending shares about 1% higher in the extended session.
on Thursday reported first-quarter profit of $3.6 billion, or $7.09 a share, on sales of $59.7 billion, up from earnings of $3.27 a share a year ago on revenue of $51 billion. That is record quarterly net income for the internet giant, which recorded revenue just slightly higher than $3 billion in the 2018 holiday-shopping period, the previous record. Amazon has now produced record revenue totals in four consecutive quarters, bringing in about $12 billion in earnings in that time.
Analysts on average projected Amazon would report earnings of $4.70 a share on sales of $59.68 billion, according to FactSet. Amazon had forecast revenue of $56 billion to $60 billion for the quarter, which disappointed investors at the time.
Amazon’s core e-commerce business produced most of the revenue, reporting North American revenue of $35.81 billion and $16.19 billion internationally, with domestic operating income of $2.29 billion and an international operating loss of $90 million. Amazon Web Services, the company’s cloud-computing arm, reported operating income of $2.22 billion on revenue of $7.7 billion, up from income of $1.4 billion on sales of $5.44 billion a year ago. Analysts on average expected operating income of $2.17 billion on revenue of $7.7 billion.
Operating profit of about $2.2 billion from the e-commerce business is what produced the big earnings beat, as analysts’ estimates called for domestic operating profit of $1.52 billion and an international loss of $605 million. The $90 million loss on international operations is the closest Amazon has come to producing a profit in that segment since doing so in the second quarter of 2016; Amazon had an operating loss of more than $2.1 billion in the international e-commerce business in 2018.
Amazon showed a deceleration in one of its biggest growth segments from 2018, advertising. The company’s “other” revenue, which bundles advertising with some other services, grew 36% to $2.72 billion year-over-year and declined sequentially. Sales in that segment had grown sequentially for at least 15 consecutive quarters, and revenue increased more than 117% in 2018.
“A larger-than-expected slowdown in other revenues after a record year of growth showcases the moderating sales for third-party sellers as the platform seeks to maximize profitability, at some cost to these sellers,” eMarketer Senior Forecasting Director Monica Peart said in an email.
Amazon’s physical stores, mostly made up of Whole Foods Markets stores, continued to struggle for growth. Amazon reported revenue of $4.31 billion from its physical store sales, up slightly from $4.26 billion a year ago and lower than the average analyst forecast of $4.39 billion.
The company forecast revenue of $59.5 billion to $63.5 billion for the second quarter, after producing revenue of $52.89 billion in that period a year ago. Analysts on average were projecting revenue of $62.39 billion.
Amazon shares closed with an increase of less than 0.1% at $1.902.25, before gaining about 0.5% in after-hours trading following the release of the report. The stock has gained 27% so far this year, as the S&P 500 index
has gained 16.8%.