Long before Amazon was the powerhouse it is now, Founder and Chief Executive Jeff Bezos learned the secret to make sure Amazon’s sales would continue to grow. And now, Bezos seems to have learned the same trick with the company’s profit margins.
During the early years of the company, it appeared that Amazon wasn’t overly concerned with turning a profit. This low rate of profit was due largely to Amazon’s commitment to keep its prices low.
However, for the first quarter of 2018, the company’s net income more than doubled.
Although Amazon will probably always be best known for being a center for internet shopping, the largest contributors to its profit gains now lies with its cloud computing and advertising sectors. In fact, Bezos noted that Amazon Web Services, or AWS, showed “remarkable acceleration” in its growth over a second straight quarter.
AWS’ revenue alone rose by almost 50 percent, coming in at 49 percent or $5.44 billion, during the first quarter. This increase is considered unusual, especially considering Amazon’s overall size and the hypercompetitive cloud computing market.
Over the course of the first quarter (Jan. 1 – Mar. 31), Amazon’s net income totalled $1.63 billion or $3.27 per share. This is up from $724 million or $1.48/share over the same span the previous year. In total, this was a 43% revenue jump.
“This was an unusually strong quarter for Amazon, where results came in both better for revenue and profits across the board.”
Along with reporting on its first quarter profits, Bezos also announced that Amazon would be raising its fee for its Prime membership from $99 to $119 per year. The service includes free two-day shipping and video streaming, among other benefits.
Amazon’s strong first quarter come in spite of the fact that the company has faced growing criticism from Congress for the way it handles data protection, as well as criticism from President Trump himself, who said the company is killing American jobs and not taxing its users highly enough.
Unlike Facebook, which has seen criticisms of its own, it appears Amazon users have yet to be swayed by Washington’s remarks.