Tencent's “Frontline” Ji Zhenyu from Silicon Valley on April 26
E-commerce giant Amazon released an earnings report that shocked the market on the 26th. Both profit and revenue far exceeded market expectations. In the quarter, Amazon achieved a profit of 1.6 billion US dollars, more than double the same period last year, and revenue increased 43% year over year to 51 billion US dollars. Driven by favorable earnings reports and optimistic expectations, Amazon's stock price rose by more than 7% after the market, hitting a record high of more than 1,600 US dollars per share.
Amazon's impressive financial results are mainly due to its North American e-commerce business and cloud business. During the quarter, Amazon's North American e-commerce business achieved revenue of US$30.7 billion, accounting for 60% of total revenue, and operating profit of US$1,149 million. Revenue from the AWS cloud services business increased 50% year over year to US$5.4 billion. Although accounting for only 10% of total revenue, the business was the most profitable of all Amazon business units, with operating profit of US$1.4 billion and operating margin of 25.7% in the quarter. Compared with that, Amazon's e-commerce business operating profit margin in North America was only 3.7%, while the operating margin in the global region was -4.2%.
It is worth noting that although Amazon's international e-commerce business has achieved a 34% revenue increase, accounting for more than 30% of total revenue, it has experienced operating losses of US$622 million, and Amazon is still unable to achieve profits in the international market.
Last week, Amazon founder Jeff Bezos said in an annual shareholder letter that the e-commerce giant has achieved 16 milestones in the past year, the most notable of which is that the number of Amazon Prime members has now exceeded 100 million registrants 13 years after launch. In 2017, Amazon sent 5 billion products to Prime members globally. As Amazon Cloud Service is Amazon's fastest growing business in recent years, the annual revenue has also exceeded 20 billion US dollars. In 2017, AWS announced 1,400 services and features. There was a 250% increase in active users during the year.
In addition to traditional e-commerce businesses and cloud services that have emerged in recent years, Amazon continues to expand its business boundaries, and the hardware ecosystem surrounding Amazon's Alexa smart voice assistant is being further improved.
It is also worth noting that Amazon's advertising business is also growing rapidly. In this quarter, Amazon's “other revenue” project, which mainly includes advertising revenue, increased 139% year over year to US$2.03 billion.
While performance continues to soar, Amazon's investment shows no sign of slowing down. Some of the key investments this year include an investment of 6 billion US dollars in the content sector, a joint project with J.P. Morgan Chase and Berkshire Hathaway to reduce medical expenses, and investment in e-commerce business in the international market.
In addition, the total number of employees at Amazon also increased by 60% over the same period last year to 560,000. In addition to the employment that needs to be increased for its own business growth, it also includes new employees added by the acquisition of Whole Foods last year.
After the financial report was announced, Amazon's stock price rose by more than 7% after the market, hitting a record high of 1,600 US dollars per share, mainly driven by optimism about future performance prospects. Amazon expects revenue of 51 billion to 54 billion US dollars in the second quarter, which is basically in line with the market's estimate of 52.2 billion US dollars, and operating profit will be between 1.1 billion and 1.9 billion US dollars. This figure also greatly exceeds the level of 1.01 billion US dollars expected by the market.
Currently, Amazon's market capitalization has reached more than 730 billion US dollars, surpassing Google by more than 10 billion US dollars to become the second largest company in the world by market capitalization, but it is still quite far from Apple's market value of more than 800 billion US dollars. With the strong rise in stock prices, Amazon founder Bezos also continues to be the richest person in the world with a wealth of 126 billion US dollars.