Amazon posts strong gain, powered by Web services

Company reports net income of $689m in most profitable quarter in its 22-year history

SEATTLE • Amazon delivered a blowout quarter, joining Facebook as one of the rare bright spots in a technology sector that has recently produced a string of disappointing earnings reports.

Helped by its fast-growing Amazon Web Services business, the company jumped to the most profitable quarter in its nearly 22-year history. Amazon often flip-flops between showing profits and losses, depending on how aggressively it decides to plow money into big new business bets.

Investors have granted the company much wider leeway to do so than other technology companies of its size often receive because of its history of delivering outsized growth.

For the first quarter, which ended March 31, Amazon reported on Thursday net income of US$513 million (S$689 million), or US$1.07 a share, up from a loss of US$57 million, or 12 US cents a share, in the same period a year ago. Revenue at the firm rose to US$29.13 billion from US$22.72 billion a year ago.

Investors were happy to see the company show profits after the disappointing run of reports from Apple, Google, Microsoft and Intel.

"The fact that they're profitable is a big deal," said Mr Christian Magoon, chief executive of Amplify Investments. "It's more of a big deal after some of the disappointing numbers from Apple and others."

For the last four quarters, Amazon has run in the black, even if it is still not quite as profitable as some technology companies. Facebook, by contrast, reported that its net income for the first three months of the year tripled to US$1.5 billion from a year earlier.

The biggest source of the company's profits is Amazon Web Services, the cloud computing business that started just over a decade ago and is now on track to bring in more than US$10 billion a year in revenue.

AWS, as the business is known, is the most popular cloud service for start-ups and for a growing number of big companies that want to rent computing capacity rather than run their own hardware and software.

Cloud computing is also much more profitable than Amazon's North American retail business, which runs on thinner margins, and its international retail business, which runs at a loss.

In a statement announcing the earnings, Mr Jeffrey Bezos, Amazon's chief executive, highlighted the performance of another growing area of investment - hardware devices - though with the lack of detail.

NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on April 30, 2016, with the headline 'Amazon posts strong gain, powered by Web services'. Print Edition | Subscribe