Amazon Outperforms Q1 Earnings Expectations With Record $3.6 Billion Net Income

Amazon heavily outperformed Q1 earnings expectations, reporting earnings of $7.09 per share — well ahead of the $4.72 per share predicted by Refinitiv. Profitability continues to be a bigger priority for the e-Commerce giant; its net income reached a record $3.6 billion, while its operating income of $4.4 billion represented a record 7.4% margin.

The wider margins come from growth in businesses like Amazon Web Services (AWS), advertising and third-party seller services, where profits are bigger but total sales tend to be smaller. The often reliable AWS cloud service continued its solid growth, with a 41% sales increase to $7.7 billion, although that was lower than last year’s 49% growth rate.AWS revenue represented 13% of total sales at Amazon, up from 10% in Q4 2018. AWS and competitor Microsoft Azure are in the last stages of competing for a $10 billion Department of Defense cloud contract. The winner will be announced by July 2019 at the earliest.

“On the non-AWS side, sales are slowing, with physical stores (i.e. Whole Foods) essentially flat, and we note the reduced growth is largely generated by…