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SEATTLE, United States — Amazon.com Inc.'s sales and profit topped estimates on robust demand for quick-turnaround delivery and gadgets like the Kindle and Echo, adding to evidence the e-commerce giant can make money even as it invests heavily in future hardware, software and entertainment.
First-quarter net income was $1.07 a share, and revenue climbed 28 percent to $29.1 billion, the Seattle-based company said Thursday in a statement. That compared with analysts’ average projection for earnings of 57 cents and sales of $28 billion, according to data compiled by Bloomberg. Amazon also gave a revenue forecast that exceeded some estimates for the current period. Shares jumped more than 12 percent.
The report may reassure investors who have been watching for signs that chief executive officer Jeff Bezos is balancing his ambitious spending with their desire for consistent profits. Amazon continues to pour money into projects such as expanding its network of US warehouses to enable speedy shipping, bolstering its offerings for online video and music streaming, and building new data centers that power its fast-growing cloud-computing division. While operating expenses rose by a quarter, the robust sales growth helps offset any renewed concerns about profitability.
“This allays investor fears that Amazon has embarked on another aggressive investment cycle tied to logistics,” said Victor Anthony, an analyst at Axiom Capital Management.
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Amazon shares, which have declined more than 10 percent this year, rose as high as $679.89 in extended trading following the report. The stock had fallen less than one percent to $602 at the close in New York.
Cloud Services
Amazon Web Services, the company’s fast-growing and profitable cloud-computing division, generated first-quarter revenue of $2.57 billion, up 64 percent from a year earlier.
Another driver of Amazon’s growth is the $99-a-year Prime membership, a subscription service that includes delivery discounts designed to convert occasional shoppers into devotees. By constantly upgrading its fast delivery options, the retailer aims to make buying something on its website comparable to the instant gratification of a quick trip to the store.
Yet as Amazon keeps adding to Prime’s perks — recently offering free two-hour delivery in big cities around the US and local restaurant delivery — costs go higher. First-quarter total operating expenses increased 25 percent to $28.1 billion.
To keep membership growing, Amazon also unveiled a monthly payment option for Prime membership and a new video-only membership to compete more directly with Netflix Inc. Amazon had 54 million Prime members in the US at the end of 2015, up 35 percent from a year earlier, according to Consumer Intelligence Research Partners. Amazon doesn’t disclose Prime membership numbers.
The company said second-quarter sales will rise to $28 billion to $30.5 billion. On average, analysts had predicted revenue of $28.3 billion.
By Spencer Soper; editors: Jillian Ward and Molly Schuetz.
