Amazon's hardware division and Amazon Web Services stood out to give the world's biggest online retailer its most profitable quarter ever.
The Seattle-based company posted a net income of $513 million, or earnings of $1.07 per share for the first quarter, recording its fourth straight profitable quarter. This is in stark contrast to the company's reported loss of $57 million four quarters back and a marked deviation from analysts' EPS projection of 58 cents.
Gross revenue stood at $29.13 billion, beating analysts' expectation of $27.98. The bulk of this revenue came from the company's North America market which contributed $17 billion.
New Hardware Fueled Earnings
Amazon's Chief Financial officer Brian Olsavsky emphasized during the earnings call on April 28 that the success of hardware sales was one of the drivers of growth during the quarter. Best sellers among Amazon's devices included the Fire tablet, the e-reader Kindle, and the smart speaker Echo.
Amazon CEO Jeff Bezos revealed that Fire tablet sales more than doubled during the first quarter compared to the same quarter last year. As a reminder, the company revamped its tablet line last fall and rolled out cheaper and faster models of its Fire tablet, including a child-focused version.
Kindle Oasis also rekindled Kindle sales. Weighing just 4.6 ounces (0.29 pound) and only 3.4 mm (0.13 inch) at its thinnest point, it is the thinnest and lightest Kindle in Amazon's Kindle suite.
The Amazon Echo series was a surprise hit, with stocks not being able to keep up with the product's fast movement.
AWS Delivered More Profit Than Amazon's Retail Business
AWS delivered strong double-digit growth at 64 percent year-over-year. Despite growing competition from Microsoft and Google, Amazon's cloud services unit generated revenue of $2.57 billion with an operating income of $604 million, higher than the $588 million operating income of its core business in North America.
TechCrunch reported that AWS has become a go-to for many businesses and the demand is still increasing based on the first quarter figures. If it continues to grow at its current rate, it could be a potential second line of business for Amazon, the report said.
The e-commerce company also disclosed that Amazon Prime has shown strong growth in many of its Prime loyalty program offerings, particularly its one-hour delivery services in select cities of Prime Now, Prime Video, and Prime Music.
Consumer Intelligence Research Partners says that the program has an estimated 54 million members in the U.S. While Amazon has not revealed the numbers on Prime subscribers, the membership could well command hefty revenue from subscription fees of $99 a year and $10.99 a month.
The company plans to ramp up spending to entice Prime customers to try other services. "We feel that program is working. We're going to significantly increase our spend in that area," said Olsavsky.
Following the earnings release, Amazon's stock surged more than 10 percent in after-hours trading.
Photo: Andrew Mager | Flickr