Amazon.com Inc. (AMZN, Financial), a major e-commerce company, said first-quarter revenues increased 43% year over year, driven by “remarkable acceleration” in Amazon Web Services (AWS) growth over the past six months according to CEO Jeff Bezos.
The company reported net sales of $51 billion for the quarter, outperforming analyst expectations by approximately $840 million. Earnings per diluted share were $3.27, up $1.79 from the prior year.
Amazon Alexa and Amazon Web Services continue strong momentum
Bezos mentioned several highlights in his shareholder letter, including strong growth in hardware products like Alexa and Echo Dot. The CEO said strong customer embrace of Alexa led to robust sales for Alexa-enabled devices, which are among the “best-selling items” across the company’s products. During the quarter, Amazon added new Alexa features, including Follow-up mode, Donations and hands-free support for Fire 7 and Fire HD 8 tablets. Such features allow users to do daily chores by simply talking to Alexa.
Bezos also said AWS “accelerated its already healthy growth”: the $20 billion revenue run rate business continues to expand in areas like “machine learning, artificial intelligence, Internet of Things and serverless computing." According to the CEO, AWS received a “seven-year head start before facing like-minded competition” yet the “team has never slowed down.”
Active users of Amazon’s machine learning services increased more than 250% over the past year, with new customers including Cathay Pacific Airways Ltd. (HKSE:00223, Financial), Expedia Group Inc. (EXPE, Financial), Intuit Inc. (INTU, Financial) and General Electric Co.’s (GE, Financial) health care business.
Company offers strong revenue outlook for the upcoming quarter
Amazon expects net sales between $51 billion and $54 billion for the second quarter, representing growth of 34% to 42% compared to the prior-year quarter. The company’s share price increased approximately 6% on the strong outlook, eclipsing $1,600 in late-day trading.
Amazon’s profitability ranks 7 out of 10 primarily due to expanding operating margins and consistent revenue growth. The company’s three-year revenue growth rate of 23.30% outperforms 93% of global competitors. Additionally, GuruFocus ranks Amazon’s business predictability four stars out of five.
Disclosure: No positions.
