Amazon published its first quarter financial results on Thursday, eclipsing market estimates with strong growth in North America and its AWS segment. Shares jumped in after hours trading.
The Seattle-based tech giant posted net income of $1.6 billion in the first quarter, or $3.27 per diluted share. Revenues came to $51 billion, up 43 percent year-over-year.
A year prior, the company reported earnings of $1.48 per share on revenue of $35.71 billion.
Wall Street was looking for earnings of $1.27 per share on revenue of $49.87 billion.
While Amazon Web Services remains a relatively small segment of Amazon's business in terms of net sales, it accounts for a huge portion of Amazon's profits. AWS net sales came to $5.44 billion for the quarter and delivered operating income of $1.4 billion. The segment's net sales grew year-over-year 49 percent.
"AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down," CEO Jeff Bezos said in a statement. "As a result, the AWS services are by far the most evolved and most functionality-rich. AWS lets developers do more and be nimbler, and it continues to get even better every day. That's why you're seeing this remarkable acceleration in AWS growth, now for two quarters in a row."
In a conference call Thursday, Amazon CFO Brian Olsavsky said AWS's run rate now stands at nearly $22 billion, thanks to strong usage from both existing customers and new customers. Amazon is "seeing people move more and more of their workloads to AWS and at a faster pace," he said. "We have the functionality and pace of innovation that others don't," he added, along with a strong partner ecosystem and security expertise.
As for Amazon's North America segment, net sales in Q1 came to $30.73 billion, up 46 percent year-over-year. Operating income was $1.15 billion.
International net sales came to $14.88 billion, up 34 percent, with an operating loss of $622 million.
On Thursday's conference call, Amazon executives said the general driver of North American growth is Amazon Prime. As announced earlier this month in Amazon's annual shareholder letter, Prime now has more than 100 million paid members globally.
Given the continued improvements in Amazon Prime, Olsavsky said Amazon is raising the price for an annual Prime plan in the US from $99 to $119, beginning on May 11. Amazon last raised the price of an annual US membership in 2014, he noted. At that time, two-day shipping was available for around 20 million items. It's now available for more than 100 million items. Additionally, a Prime membership now includes more digital entertainment options.
"The value of Prime to customers has never been greater," Olsavsky said.
For the second quarter, Amazon expects net sales between $51 billion and $54 billion with operating income between $1.1 billion and $1.9 billion.