UPDATED with analyst call details: Retail giant Amazon.com more than doubled its quarterly profits, thanks to fiscal discipline and double-digit growth of its AWS cloud service business and subscriptions, and a healthy boost of revenue from Whole Foods.
The company reported earnings of $1.6 billion or $3.27 a share, compared with $1.48 a share a year ago. Revenues rose nearly 43% to $51 billion — well past consensus estimates of $1.27 per share.
Investors reacted enthusiastically to the results, driving share prices up 6% to $1,615 in after-hours trading.
Online sales still account for the bulk of Amazon’s revenue, bringing in $26.9 billion in the quarter. That’s up 18% from a year ago.
Analysts expected Amazon to see a boost from its acquisition of Whole Foods, which closed in August. The high-end market chain added $4.2 billion in revenue. Amazon introduced adding one- and two-hour grocery delivery services in 10 cities.
The Amazon Web Services business — the computers that power cloud-based business applications — was expected to see healthy growth. AWS reported $5.4 billion in revenue, up 49% from a year ago. CEO Jeff Bezos described the growth as “remarkable” in prepared remarks for shareholders.
Hollywood likely will pay closest attention to Amazon’s subscription revenue. Bezos revealed subscriber numbers for the first time recently, an eye-catching 100 million paying Prime members. Amazon reported that brought in $3.1 billion in revenue from subscriptions, up 60% from a year earlier.
Amazon reported “tens of millions” of paid customers are now using Amazon Music, with Amazon Music Unlimited subscriptions growing more than 100% in the last six months.
During the call, Merrill Lynch Internet analyst Justin Post indirectly referenced President Donald Trump’s attacks on Amazon for using the U.S. Postal Service for package delivery — at a cost of “billions” to the taxpayers, the president contends. Post asked whether Amazon was working on building out its own delivery.
Amazon CFO Brian Olsavsky said Amazon is “growing our teams and capabilities” to keep up with delivery volume, but plans to continue using a combination of “external partners” and internal capabilities.
Another Trump hot-button topic — taxes — also came up during the call. Amazon collects sales tax in the 45 states for the products it directly sells. The president has an issue with collection of third-party vendors.
The company said the issue of sales tax collection needs to get resolved at the federal level. It’s not opposed to collecting taxes, just that the process be simple and applied even-handedly.