Amazon, the world's largest online retailer, reported its operating results for the second quarter were a mixed bag, but analysts took heart in that profits came in more than double that of Wall Street expectations despite weaker revenues.
The Seattle retail and tech monster reported earnings-per-share of $5.07 on Thursday, which was higher than analysts' estimates of $2.49 per share, and a massive twelve-fold increase year-on-year to a record $2.5 billion.
This result is the third consecutive quarter where Amazon exceeded $1 billion in profits. Amazon's quarterly profit rose past the $1 billion level for the first time in the fourth quarter of 2017.
On the other hand, Amazon's sales of $52.9 billion missed analysts' expectations of $53.35 billion. Net sales for Amazon Web Services (AWS) rose to 49 percent to $6.1 billion compared to $4.1 billion for the same period in 2017. Amazon's stock was up nearly four percent in after-hours trading yesterday.
Amazon's total revenue (including sales from Whole Foods) rose 39 percent year-on-year. North America revenue jumped 44 percent to $32.1 billion, while international sales grew 27 percent to $14.6 billion.
The rise in profits is largely driven by the growth of Amazon's high-margin businesses, like cloud and advertising. The two business units were a "big contributor" to profit growth as Amazon's traditional retail business only generates thin margins, said Amazon CFO, Brian Olsavsky.
He also credited better efficiencies in Amazon's warehouses and data centers, and the growth of Amazon's higher-margin third-party marketplace for the hefty profits.
Revenues from Amazon's cloud service grew for the third straight quarter, this time to $6.1 billion. This 49 percent year-over-year growth occurred despite increased competition from Microsoft and Google. Cloud service revenue is only 11 percent of Amazon's total sales, but its operating income of $1.6 billion accounted for 55 percent of the total.
Amazon's other revenues came in at $2.2 billion, 132 percent higher than Q2 2017. This is the second-straight quarter Amazon exceeded $2 billion in advertising revenue.
Amazon saw an increase in its workforce to record-high 575,700 employees in the quarter. That's 51 percent from last year and a two percent increase from the past quarter.
The downside to this pretty picture is Amazon's horrible and enduring reputation of paying its employees, especially its contractual employees, wages below the minimum wage. And it's a fact Bezos earns more every minute than Amazon's lowest-paid workers do in an entire year. Amazon's seasonal workers are only paid around $11.50 per hour plus overtime for shifts of 10 or more hours.
