On Thursday, Amazon.com Inc.’s Q2 earnings report was more than investors have expected. The company’s revenue soared 31 percent and profit hit a new record for the third time in a row. Yet, despite tremendous performance, the e-commence giant’s stock barely budged to 2 percent in after-hours.
One of the big surprises was that the operating margin which has so far been historically low, rose more than two times. Plus it is the fifth quarter that is paired with profitability despite recent heavy investments.
Analysts noted that they were pleasantly surprised to learn that the pace of revenue growth accelerated so fast. However, investors are expected to requests similar results in the future as well.
After a streak of huge investments and losses, shareholders have been keeping their fingers crossed wishing the company would some day become once more profitable. The last time the firm saw five profitable quarters in a row was four years ago when it reinvested revenues in R&D and infrastructure such as monster warehouses.
CFO Brian Olsavsky pledged Thursday that the company will keep expanding its network this quarter and now eyes 18 new warehouses for the sake of operational performance.
The company’s operating profit margin was 4.2 percent in the second quarter. This means that the company is more effective in keeping costs in check from a year prior when the metric was just 2 percent.
- For Q2, the Seattle-based company reported $30.4 billion sales revenue and $857 million profit which represents a $1.78 gain per share.
- Last year, Q2 profit was just $92 million with nearly 20 cents per share.
- The report beat all Street’s expectations which has expected a $1.11 per share gain and a $28 to $30.5 billion revenue.
Analysts explained that revenue was pushed up by an extremely profitable Amazon Web Services cloud business, which saw a 58 percent gain. The company’s chief executive hopes that the unit reaches $10 billion in sales by the end of the year, but experts believe that AWS will beat those expectations as well.
AWS is so popular since large companies, startups and government actors rely on it to store their data. Amazon has also partnerships with important banks and tech companies which gave it an edge against Microsoft and Google that provide rival computing services.
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