Amazon surges in Q1; devices, cloud services fuel revenue growth
Amazon.com Inc. swung from loss to profit and significantly boosted net sales during a first quarter that topped analysts expectations.
The world’s largest online retailer reported better-than-expected net income of $513 million, compared to a net loss of $57 million in the first quarter of fiscal 2015.
Net sales also topped forecasts, rising 28% to $29.1 billion from $22.7 billion. Strong sales of Amazon devices, including Echo and Fire tablets, helped drive revenue. So did the company’s cloud services business, Amazon Web Services, whose sales jumped 63.9% to $2.57 billion. The unit is Amazon’s fastest growing business.
"Amazon devices are the top selling products on Amazon, and customers purchased more than twice as many Fire tablets than first quarter last year,” said Jeff Bezos, founder and CEO of Amazon.com. “Echo too is off to an incredible start, and we can’t yet manage to keep it in stock despite all efforts. We’re building premium products at non-premium prices, and we’re thrilled so many customers are responding to our approach.”
On the profit side, operating expenses did not keep pace with sales growth and there was a significant increase in stock-based and other compensation, all of which helped create net income. Operating income was $1.1 billion in the first quarter, compared with $255 million a year earlier.
Looking ahead, net sales are expected to be between $28 billion and $30.5 billion in the second quarter, growing between 21% and 32% compared with second quarter 2015.
In addition, eMarketer and Slice Intelligence released some interesting data about certain areas of Amazon’s performance. According to eMarketer, Amazon captured $79.3 billion in U.S. e-commerce sales during the last 12 months, growing 13% from the previous 12 months. Its next-closest rival, Walmart, trailed far behind in ecommerce sales, taking in just $13.5 billion in the last 12 months.
Walmart can take some solace in the fact its e-commerce growth rate of 15% was slightly better than Amazon’s.
Meanwhile, Slice Intelligence analysis indicates Alexa products account for 26% of Amazon device unit sales and 41% of dollar sales, beating the Kindle by seven percentage points. Echo accounts for 89% of Alexa device sales.
Relative to the overall online shopping population, those that buy Echo devices are slightly concentrated between 36 and 66, affluent (35% have annual household income above $100,000), and male (70%).
Echo buyers are heavy Amazon purchasers across all categories, but a purchase of an Echo device was followed by a 7% increase in spend per person on CPG items. Slice terms this an early, but promising sign for Amazon.