Amazon.com Inc. reported record quarterly profits today, as the leading online retailer attracted shoppers around the world amid the pandemic-driven shift to online purchasing.
Amazon’s total revenue increased 43.8% to $108.518 billion—the second consecutive quarter it has exceeded the $100 billion mark in a three-month period, a figure it had never reached before the fourth quarter of 2020. North American sales went up 39.5% to $64.366 billion while international sales increased 60.4% to $30.649 billion.
The online retailer’s net income shot up 219.8% to $8.107 billion, exceeding the company’s previous record of $7.222 billion set in the fourth quarter of 2020. Amazon exceeded Q4 profits in the current quarter, even though its revenue was 13.6% higher during the fourth quarter, which included both the holiday season and a rescheduled Prime Day sale that occurred in October 2020.
Amazon’s growing advertising revenue boosts profits
A big contributor to Amazon’s increased profits came from its advertising business, which makes up the bulk of the revenue in a category Amazon calls “Other.” Revenue in that category rocketed up 76.8% to $6.905 billion as competing retailers and brands advertised on Amazon’s site to its huge user base, which includes more than 200 million Amazon Prime members worldwide . Advertising revenue is highly profitable, and the $3 billion increase in this category helped propel Amazon to record profits.
Amazon Web Services, the company’s market-leading cloud computing service, increased its revenue by 32.1% to $13.503 billion. The highly profitable business unit accounted for 47.0% of Amazon’s operating income, but that was down from 77.1% in Q1 2020 as Amazon made more money from retailing and advertising than it did a year ago.
The company’s international segment, which has frequently lost money, turned in operating income of $1.252 billion. Amazon launched a new ecommerce site in Poland in March, its 16th full-fledged shopping site around the world.
Amazon projected second quarter revenue of between $110.0 and $116.0 billion, which would represent growth of between 24% and 30% over the same quarter last year. The growth projection is based in part on Amazon’s plans to hold its annual Prime Day sale late in the second quarter of the year, instead of in July where it had been from 2015 through 2019 until the COVID-19 pandemic forced Amazon to move it to October last year.
Amazon chief financial officer Brian Olsavsky said the Olympic Games, which are scheduled to start in Japan in late July and the fact that many consumers take vacations in July were considerations in moving Prime Day earlier this year. “We believe it might be better timing later in Q2, and that is what we are testing this year,” he told investment analysts on a conference call today.
Amazon is No. 1 in the 2021 Digital Commerce 360 Top 1000.
Amazon’s performance in the first quarter, ending March 31, 2021:
- Net sales of $108.518 billion, a 43.8% increase from $75.452 billion in the same quarter in 2020. Net product sales accounted for $57.491 billion, up 37.4% year over year from $41.841 billion. Net service sales, which include Amazon’s fulfillment services for sellers on its marketplaces, hit $51.027 billion, up 51.8% from the prior year’s $33.611 billion.
- North American net sales of $64.366 billion, up 39.5% from $46.127 billion in the first quarter of 2020. North America accounted for 59.3% of total net sales in the first quarter of 2020, or 67.7% of sales excluding Amazon Web Services.
- International net sales totaling $30.649 billion, up 60.4% from $19.106 billion in the first quarter of 2020. International accounted for 28.2% of total net sales in the fourth quarter, or 32.3% of sales, excluding AWS.
- Amazon Web Services revenue hit $13.503 billion during the quarter, up 32.1% from $10.219 billion a year earlier. AWS sales accounted for 12.4% of consolidated revenue in the first quarter of 2020.
- Other revenue, including Amazon’s rapidly growing advertising business, totaled $6.905 billion, up 76.8% from $3.906 billion in the same period in 2020.
- Revenue from subscriptions, including Prime member fees, was $7.580 billion, up 36.4% from $5.556 billion in the same period in 2020.
- Amazon’s operating income rose 103.2% to $8.865 billion from $3.989 billion. AWS earned $4.163 billion in operating income, an increase of 35.4% from $3.075 billion a year ago. That profit represented 47.0% of Amazon’s Q1 operating income, down from 77.1% in the same quarter last year.
- Net income of $8.107 billion, up 219.8% from $2.535 billion in the same period in 2020.
- Spending on fulfillment increased 43.4% to $16.530 billion, up from $11.531 billion in the same period in 2020.
Stay on top of the latest developments in the ecommerce industry by signing up for a complimentary subscription to our email newsletter, Digital Commerce 360 Retail News.