Amazon posts jump in profits as cloud sales grow 70 per cent

Amazon has reported a surprise profit, the second quarter in a row that the notoriously unprofitable web retailer has been in the black, making Jeff Bezos the third-richest man in America. Overall, AWS now accounts for around 8 percent of Amazon’s total revenue, but almost half of its total profits, which puts it close to matching the performance of its entire North American e-commerce division. But in recent quarters, it has shown an ability to turn a profit, too.

Two consecutive quarters of profit are rare for Amazon, which has historically operated at a loss. In July, it held its first Prime Day that offered deals for all Prime subscribers.

Amazon’s sales have been up overall.

“Customers are really responding”, he said. “They have grown their mobile user base to over 118 million, though the service is still mainly used online via PCs”, Hannu Verkasalo, CEO of Verto Analytics, wrote in a research note. Sales were US$20.6 billion a year earlier, when Amazon’s stock tumbled due to little demand for the Fire smartphone.

“Amazon Web Services is really proving to be a major driver for the bottom line”.

Accenture and AWS announced the formation of the Accenture AWS Business Group, a team of dedicated professionals from both Accenture and AWS that will help enterprise customers more easily migrate their existing applications and build new applications for the AWS Cloud.

Bezos noted that the Fire tablet is the best selling product on Amazon, and due to the recent price cuts, Amazon is now building “millions more” than it had planned.

Amazon had net income of 17 cents per share. Analysts at Wedbush securities estimated that the event alone resulted in incremental revenue of around $1.2 billion. Despite this, majority of analysts still believe in the company and have given a Buy rating with an average 12 month price target of $654.79. Free cash flow increased to $5.4 billion for the trailing twelve months, compared with $1.1 billion for the trailing twelve months ended September 30, 2014.

One of the biggest drivers was the strong growth in its relatively high-margin cloud computing business.

Looking ahead, Amazon said it expects net sales in the fourth quarter to be between $33.50 billion and $36.75 billion up 14 to 25 percent from past year.