Amazon’s Profit Triples in a Quarter of $100bn Sales

30 Apr 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Amazon revenue soars above $100bn for a second straight quarter
  • Shares of the company jump to a new all-time high

Amazon’s Profit Triples in a Quarter of $100bn Sales

Amazon’s first-quarter earnings blew past Wall Street expectations. First-quarter profits of the e-commerce and cloud-computing giant more than tripled to a record of $8.1bn. Driving earnings were deliveries, cloud services, and its advertising business, which itself had a revenue of nearly $7bn. Almost half of Amazon’s operating income, $4.2bn, came from the company’s cloud services division that got boosted from the work-from-home model, prompted by the continued lockdowns and business restrictions.

The Seattle company’s revenue reached $108bn, marking a second straight quarter of $100bn-plus sales. Moreover, Amazon’s guidance for the current quarter is a continued swing to the upside, as the company predicts $110bn to $116bn in sales for the period April through June, even amid reopening economies around the globe. Net income for the current quarter is expected to land between $4.5bn and $8bn.

Earnings per share reached $15.79, vs the expected $9.54. Revenue also came in higher-than-expected, at $108.52bn, or a 44% increase year-on-year, comfortably beating $104.47bn forecasted. Amazon Web Services, the company’s cloud division, saw net sales of $13.5bn, an increase of 32% year-on-year. Advertising sales are generally not disclosed by Amazon, they are present in the “Other” category, which grew to $6.9bn, or an increase of 77%, compared with the same quarter a year ago.

Jeff Bezos’ ‘Proud Dad’ Moment

“Two of our kids are now 10 and 15 years old—and after years of being nurtured, they’re growing up fast and coming into their own,” Amazon CEO Jeff Bezos said in the first-quarter report, referring to Prime Video and AWS. Mr. Bezos mentioned that the company’s popular streaming service, Prime Video, has seen strong growth during the pandemic. “As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year,” he said in the release. “In just 15 years, AWS has become a $54 billion annual sales run rate business competing against the world’s largest technology companies, and its growth is accelerating—up 32% year over year,” the CEO added.

Amazon shares rose about 5% in after-hours trading immediately after the earnings report was released. Later, however, the price subsided and, currently, pre-market trading shows Amazon stock is implied to open 2.3% to the upside at a record above $3,550 a share.

The retail and cloud-computing giant announced Wednesday that it’s raising the pay for hundreds of thousands of its employees. More than 500,000 Amazon workers will receive pay increases of anywhere between 50 cents and $3 per hour. In 2018, Amazon raised its starting wage to $15, more than double the rate of the minimum wage in the US, which stands at $7.25 and hasn’t been changed since 2009.

Amazon said the initiative for higher wages represents an investment of over $1bn aimed to boost employee satisfaction in the workplace. Currently, Amazon employs over 950,000 people in the US. To respond to the pandemic last year, the company added 500,000 new jobs last year worldwide, bringing its

total workforce to 1.3 million people globally. The $1bn investment in higher pays will be taken from last year’s profits, which rose to $21.3bn.

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