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Amazon smashes earnings expectations

CNBC logo CNBC 4/25/2019 Eugene Kim
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Amazon reported first-quarter earnings on Thursday that reflected an on-going change at the company: less growth but fatter profit margins.

Despite the huge beat in earnings, Amazon stock is essentially unchanged in after hours trading as revenue matched street estimates.

Here are the most important numbers:

  • EPS: $7.09 vs. $4.72, according to analysts surveyed by Refinitiv
  • Revenue: $59.7 billion vs. $59.7 billion, according to Refinitiv
  • AWS: $7.7 billion vs. $7.7 billion, according to analysts surveyed by FactSet

Amazon’s revenue came to a slowdown across the board. It’s total revenue grew 16.9% compared to the year-ago period, representing the slowest expansion since the first-quarter of 2015. Its North American revenue saw 17% increase, compared to last year’s 46% growth, while international growth dropped to just 9%, down from the previous year’s 34% growth rate.

Amazon’s cloud service, meanwhile, continued its solid growth with a 41% sales increase, although that was also a decrease from last year’s 49% growth rate.

Investors, however, are seeing more profitability from Amazon in exchange. Net income hit a record $3.6 billion, and its operating profit of $4.4 billion represented a record 7.4% margin.

The wider margins come from growth in businesses like cloud, advertising and third-party seller services, where profits are bigger but total sales are smaller. Whole Foods, a slower-growing business, is also now fully integrated into Amazon’s results.

Amazon has been one of the best performing big tech stocks this year, up 28% in 2019. It is currently the third most valuable company in the world, behind Microsoft and Apple.

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