Amazon profit soars, doubling Wall Street's estimate

The case for Amazon

Strategic Resource Group managing director Burt Flickinger and Benchmark Investments managing partner Kevin Kelly discuss Amazon’s growth in advertising and e-commerce ahead of the company’s second-quarter earnings report.

Amazon on Thursday reported a second-quarter profit that handily beat Wall Street’s expectations, as growth in online shopping and cloud-computing gains continued to lift the e-commerce giant.

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The company said it earned $2.53 billion in the most recent quarter, well above its $197 million profit in the same period a year earlier. On a per-share basis, Amazon booked earnings of $5.07, more than double analysts’ estimate of $2.50.

Revenue surged 39% to $52.89 billion, slightly below the consensus estimate of $53.41 billion.

Seattle-based Amazon has benefited from an expanded footprint in cloud-computing services, as well as the addition of Whole Foods, which the company acquired last year.

Amazon Web Services recorded $6.1 billion in revenue, a 49% increase, during the second quarter. Revenue from physical stores, including Whole Foods, reached $4.31 billion.


Operating expenses grew about 33% to $49.9 billion, including $7.2 billion related to technology and content. Amazon spent $5.5 billion on technology and content in the year-ago period. The company has spent heavily on original programming and other video content as it competes with video streaming rivals like Netflix.

Amazon, which employs more than 575,000 people and accounts for approximately half of all online sales in the U.S., expects revenue of $54 billion to $57.5 billion in the third quarter. The company projected operating income of $1.4 billion to $2.4 billion, more than analysts were expecting.

AMZNAMAZON.COM INC.1,808.00-55.61-2.98%

CEO Jeff Bezos revealed for the first time in April that the company has more than 100 million paid members of its Prime subscription service, which includes free shipping, video streaming, Whole Foods discounts and other perks. Amazon recently raised the annual price of Prime memberships to $119, a 20% increase.

Amazon shares have gained about 55% since the start of the year. The stock rose 3.1% in after-hours trading following the earnings report.

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