Amazon profit beats expectations on booming sales

Amazon on Thursday reported a quarterly profit that trounced market expectations, driven by strong sales helped by its annual Prime discount event.

The tech giant said it made a profit of $6.7 billion in the recently ended quarter, eclipsing earnings forecasts.

"It was another strong quarter of progress for Amazon," the company's chief executive Andy Jassy said in an earnings release.

Amazon shares were up more than 7 percent to $138.79 in after-market trades that followed the release of the earnings figures.

Net sales revenue at Amazon increased 11 percent to $134.4 billion, compared with $121.2 billion in the same quarter a year earlier, the earnings report showed.

The e-commerce colossus boasted of having its "biggest Prime Day event ever" in July, with subscribers to the Amazon service worldwide ordering more than 375 million items.

"The upturn in Amazon's commerce business is an encouraging sign for the back half of the year," said Insider Intelligence principal analyst Andrew Lipsman.

Flourishing online sales also promise to boost Amazon's profitable advertising business, Lipsman added.

Amazon is seeing strong demand for advertising services on its platform, which includes "Prime" streaming television and music services, according to Jassy.

Order delivery speeds in the US were the fastest ever, with Amazon continuing to work on optimizing efficiency and lowering costs at fulfillment centers, according to the company.

"We continued lowering our cost to serve in our fulfillment network, while also providing Prime customers with the fastest delivery speeds we've ever recorded," Jassy said.

Investors are keen to see whether a tightened budget and improved efficiency is paying off for Amazon.

Jassy in March laid out a plan to cut 9,000 more jobs from the online retail giant's workforce, following the 18,000 that were axed in January

Jassy told his workers at the time that the extra layoffs were necessary as the company seeks a way to downsize after years of sustained hiring.

The hiring jump was largely caused by the coronavirus pandemic when users in Amazon's major markets turned to the internet for shopping and entertainment, in a massive boost to the Seattle-based company.

The layoffs are part of the giant's cost-cutting campaign that also saw a pause in plans to open a new company headquarters in the Washington, DC area.

Revenue taken in by the Amazon Web Services (AWS) cloud computing unit was increased to $22 billion in a year-over-year comparison, but costs increased as well, resulting in an operating income of $5.4 billion compared with $5.7 billion in the same period in 2022.

"Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment," Jassy said.

"AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative AI releases."

AWS remains a concern, however, and pressure is on to show growth as the broader economy recovers and companies invest in cloud-based computing power, according to analyst Lipsman.