Amazon's first quarter brings another record profit

Revenue growth is slowing, though.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
3 min read

Amazon CEO Jeff Bezos at a Wired conference last year.


Amazon's isn't growing as fast is it used to, but it's profiting a lot more than before.

For its first quarter, Amazon reported on Thursday a fourth straight record profit, reaching $3.6 billion, or $7.09 a share, and trouncing analysts' estimates of $4.72 a share while soaring past its year-earlier income of $1.6 billion, or $3.27 a share.

Revenue rose 17%, to $59.7 billion, at the higher end of the company's guidance of $56 billion to $60 billion.

The company expects to post $59.5 billion to $63.5 billion in revenue in its current quarter, compared with $62.4 billion predicted by analysts polled by Yahoo Finance.

Separately, Amazon announced Thursday that it plans on turning its Prime two-day shipping service into a one-day service.

Amazon finance chief Brian Olsavsky said on a call with reporters Thursday that the huge earnings growth stemmed in part from lower-than-expected costs and squeezing more efficiencies from Amazon's warehouses.

"[We] probably overestimated a bit in how much we would spend and hire in the first quarter," he said, but he warned that such spending should rise later this year.

Watch this: Amazon kills plans for NYC headquarters

The world's biggest e-commerce company reported its latest numbers after going through a rough start to 2019. The company faced a wall of opposition from local activists and politicians for its HQ2 development project in New York, which was supposed to bring 25,000 new employees to the city. In February, Amazon scrapped the project after more than a year of searching for a location. A similarly sized campus is still planned for Arlington, Virginia.

Also, CEO and founder Jeff Bezos this month finalized his divorce from his wife of 25 years. His new girlfriend and a dustup with the National Enquirer supermarket tabloid made the usually private executive a regular on gossip pages.

So far, neither issue has appeared to harm Amazon's business in any significant way, and the company's stock is up about 24% this year. Shares on Thursday were flat.

Though Wall Street has taken the HQ2 debacle and Bezos' divorce in stride, it's paying closer attention to Amazon's spending and growth. Olsavsky warned in February that Amazon's investments in more infrastructure and hiring will rise this year, which may crimp profits. He reiterated that point again Thursday, despite better results in the first quarter. Also, Amazon isn't growing at the same rate it was just a few years ago, since it's now a far bigger company. Time will tell whether Amazon will remain a Wall Street darling after its revenue growth fell below 20%, a level it had been able to maintain for three years running until this latest quarter.

Amazon Web Services, the company's hugely profitable cloud-computing unit, again supported earnings growth. AWS in the first quarter reported $2.2 billion in operating income, up 59% from a year earlier. In comparison, Amazon's North American retail unit, which brings in nearly five times more revenue than AWS, posted just slightly higher operating profit than the cloud unit.

The company's "other" revenue, which primarily includes its rapidly growing ad business, posted weaker revenue growth of 34% in the latest quarter, to $2.7 billion. Olsavsky on Thursday said the lower increase was due in part to an accounting change, adding that the ad business is growing at a higher rate than the 34%.

Total number of employees was 630,600, down from a holiday peak of 647,500, but up 12% from a year earlier.

Originally published April 25, 1:05 p.m. PT.
Update, 2:04 p.m.: Adds details from CFO call.