E-commerce giant Amazon (AMZN) has reported better-than-expected first-quarter financial results due largely to accelerating growth in online advertising and cloud computing.
The Seattle-based company announced earnings per share (EPS) of $0.98 U.S. compared to $0.83 U.S. that was forecast on Wall Street. Earnings more than tripled from $0.31 U.S. a year earlier.
Revenue in the January through March period totaled $143.3 billion U.S. versus $142.5 billion U.S. that was expected among analysts. Sales were up 13% year over year.
Amazon Web Services (AWS), the company’s cloud computing unit, recorded $25 billion U.S. of revenue, beating estimates of $24.5 billion U.S. AWS accounted for 62% of total operating profit.
Advertising at Amazon racked up revenue of $11.8 billion U.S. versus 11.7 billion U.S. that was expected among analysts. Advertising sales surged 24% during the quarter from a year ago.
The company’s ad business grew faster than either retail sales or cloud computing and has become an important profit driver for Amazon.
Late last year, the company started running ads on its Prime Video streaming service, a move analysts expect will generate significant additional revenue over time.
In a sign that the company’s cost-cutting measures are working, operating income soared more than 200% during Q1 to $15.3 billion U.S., outpacing revenue growth.
Amazon’s earnings growth has been driven, in part, by cost-cutting. The company has laid off more than 27,000 employees since late 2022, with cuts continuing this year.
Looking ahead, Amazon provided conservative guidance, saying it expects continued growth but at a more measured pace.
The company said is expects second quarter operating income of $10 billion U.S. to $14 billion U.S., which would be up from $7.7 billion U.S. a year ago.
Revenue in the current quarter is expected to come in at $144 billion U.S. to $149 billion U.S., said Amazon, marking growth of 7% to 11%.
The revenue guidance fell short of Wall Street forecasts of 12% growth to $150.1 billion U.S. during Q2.
On an earnings call with analysts and media, Amazon executives said that demand for generative artificial intelligence (AI) should bolster the cloud business going forward.
Hopes for a quarterly dividend from Amazon were dashed as the company declined to implement a payout to shareholders.
Amazon is the only mega-cap tech company that does not pay any distribution. The company had $73.9 billion U.S. of cash on hand at the end of Q1, up from $54.3 billion U.S. a year earlier.
Over the last 12 months, Amazon’s stock has risen 72% to trade at $175 U.S. per share.
