Amazon, for the first time in its history, reported figures for its cloud services business Amazon Web Services. The first quarter revenue grew more than anticipated as rising sales in North America and it cloud-computing services unit balance new business investments, increasing its share value by 7%.
Usually very secretive about the financial details, Amazon opened up its financial details on Amazon Web Services saying its revenue leaped around 50% to $1.57 billion. The unit’s operating income grew 8% to $265 million.
Share value of the company rose $26.01 to $416 in extended trading, after closing slightly at $389.99 on Nasdaq. Jeff Bezos, the chief executive of Amazon declared in a statement that worth of Amazon Web Services has raised to $5 billion business and its growth is accelerating. Tom Szhutak, the chief financial officer said, “We are putting a lot of capex there, and we think over time we will be able to generate significant free cash flow.”
Cloud business has resulted to me more profitable and revenue generating than estimated, said Wedbush Securities analyst Michael Pachter. He added, “Amazon’s Web service is profitable and apparently was a year ago as well. Everybody thought it was losing money and is probable a bit smaller than people thought it was.”
In North America, Amazon sales increased from 24% to $13.4 billion in the quarter ended March 31st. The company is working on to improve its Prime delivery business with its one-hour delivery service called Prime Now. The company is also focusing on original content for its Prime instant video services and devices.
The international unit which generates a major portion i.e., 35% of sales had a slight fall in this quarter with it slipping 1.77% to $7.75 billion. The company has been investing more in its international business especially in India but it remains quite hesitant about China. Szhutak said “The growth rate in India is very fast.” He also added, “A big part of the challenge there is helping sellers to succeed and grow their online businesses.”
Amazon said it anticipated overall sales to grow 7% to 18% in the present quarter to $20.6 billion to $22.8 billion. It also estimated an operating loss of $500 million to an operating income of $50 million for the quarter.