Amazon profit rises but sales growth could slow

30 July, 2018, 04:22 | Author: Sheri Evans
  • Amazon shares rise after reporting record quarterly profit

A July event that the company created to drum up business during the summer shopping lulls, Prime Day, has become a bonafide event to rival Black Friday.

Amazon highlighted its Alexa intelligent assistant in its quarterly earnings report, touting its expanded calendar features and new information about current events like the Royal Wedding, the 2018 FIFA World Cup matches and the NBA Playoffs.

As an e-commerce behemoth whose online sales account for nearly half of the total in the United States, Amazon expects its revenue to grow to between 54 billion to 57.5 billion dollars in the third quarter, with a projected operating income of 1.4 billion dollars to 2.4 billion dollars.

It also announced the general availability of Amazon Neptune, a fast, reliable, and fully-managed graph database service.

Amazon's spending typically climbs in the July through September quarter, pressuring profits as the company prepares for Christmas and the winter holidays, its peak sales period for the year.

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But Amazon's eye-popping growth has also led to increased scrutiny over the possibility that the company's market dominance gives it monopoly power.

'We want customers to be able to use Alexa wherever they are, ' Mr Bezos said. Web services generated $6.1 billion in revenue, a 49 percent increase from the same period a year ago.

Amazon will capture almost half of all online spending in the US this year, according to EMarketer Inc.

The results, showing strength in Amazon's e-commerce, content, and cloud services businesses, illustrate the broad reach of the company's operations.

Brian Olsavsky, Amazon's chief financial officer, expanded on the company's advertising fortunes during a conference call with analysts. "We've seen a greater-than-expected efficiency in a lot of our spend in things like warehouses, data centres, marketing".

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The Seattle-based tech giant posted net income of $2.5 billion in the second quarter, or $5.07 per diluted share.

Revenue for the quarter came to $52.89 billion, below the $53.37 billion analysts expected. Prime Day sales are not included in Q2 earnings.

The firm said it would raise the price of Prime memberships in the USA by $20, but that doesn't seem to have deterred consumers. It purchased online pharmacy PillPack last month, which followed its US$13.7 billion acquisition of Whole Foods past year to jump start its struggling grocery business.

Reinforcing the fact that Alexa is a focus for the company, Amazon CEO Jeff Bezos was quoted in the company's earnings release about its importance.

Although its revenue fell shy of projections, investors still applauded the results, sending the stock up as much as 4% in after-hours trading. Additionally, customers can now use Alexa to control more than 13,000 smart home devices from over 2,500 unique brands.

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Shoppers purchaed more than five million toys, beauty products, PCs, apparel items and kitchen products. Those efforts include snagging more well-known brands to selling their wares on Amazon.com, a steady increase in private label fashion products available in the USA, and the nationwide rollout of Amazon Wardrobe, a service that allows Prime members to choose up to 8 items for users to try on at home for 7 days until Amazon charges the user.

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