Amazon posts record profits in Q2

As the e-commerce company posts its fifth-straight quarter of profits, with Amazon Web Services sales growing at a rapid clip.
Written by Stephanie Condon, Senior Writer

Amazon on Thursday reported record profits for the second quarter, with Amazon Web Services revenues growing at a rapid clip.

The e-commerce giant reported a net income of $857 million, or $1.78 per share, on revenues of $30.4 billion, compared with 19 cents a share on $23.19 billion of income in the second quarter of 2015.

Wall Street was looking for earnings of $1.11 per share on revenues of $29.55 billion. .

By segment, North America drew in $17.7 billion in net sales, International accounted for $9.8 billion, and AWS accounted for $2.9 billion. AWS -- which now accounts for 10 percent of sales, compared with 8 percent of last year -- saw its sales grow 58 percent. North America's sales increased 28 percent, while international grew 30 percent.

Overall, operating income was $1.3 billion in the second quarter, compared with $464 million in second quarter 2015. AWS posted $718 million in operating income, accounting for 56 percent of overall operating income.


While AWS is still growing quickly, it's not growing as quickly as it was in past quarters -- compare is 58 percent growth rate in Q2 with 64 percent growth in Q1 and 69 percent growth in Q4 2015. Meanwhile, other big public cloud providers like IBM and Microsoft are eyeing their own growing margins.

On Thursday's conference call, Amazon executives stressed there's "plenty of room for multiple winners in this business." That said, they said customers will choose AWS for three reasons: its functionality and pace of innovation, its partner and customer ecosystem and Amazon's experience in the business.

They noted that Amazon continues to expand the geographic footprint of AWS and is investing in new application services. They're adding functionality in areas like mobile and machine learning.

In a statement, CEO Jeff Bezos stressed the different areas in which Amazon is expanding.

"It's been a busy few months for Amazon around the world, and particularly in India -- where we launched a new AWS Region, introduced Prime with unlimited free shipping, and announced that Prime Video is coming soon, offering Prime members in India exclusive access to Amazon Original Series and Movies -- including original content featuring top Indian creators and talent," he said.

For the third quarter, Amazon said it expects net sales between $31 billion and $33.5 billion, or to grow between 22 percent and 32 percent compared with third quarter 2015. Operating income is expected to fall between $50 million and $650 million, compared with $406 million in third quarter 2015.

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