Amazon’s Revenues Surge 28 Percent

Amazon’s earnings finally made Wall Street happy.

Which, they don’t always do — even if the company does make a profit.

For instance, when Amazon posted a Q4 2015 profit of $482 million, lower than expected, its stock dipped 13 percent in post-trading hours.

Fast forward to Q1, and Amazon’s earnings managed to send its stock up 12 percent post-trading hours on a profit of $513 million — its fourth straight quarter of profits.

Could the new (profit-making) Amazon be here to stay?

On the revenue front, Amazon also beat expectations, as sales increased 28 percent to $29.1 billion, up from $22.7 billion a year ago. Operating income was $1.1 billion for the quarter, compared with $255 million in 2015’s Q1.

Retail sales continued to be a shining star for Amazon, hitting $20.5 billion — a 31 percent increase from the year prior. Amazon Web Services (AWS) also saw a big boost to $2.6 billion in revenues — up 63 percent.

While Amazon CFO Brian Olsavsky was questioned multiple times on Prime’s success and growth, he didn’t provide any details on just how much success that represents for Amazon. Last quarter, he revealed that Prime grew 47 percent in the U.S and grew 51 percent when accounting for its global audience in 2015.

But, on the flipside, fulfillment costs are still high for Amazon, costing Amazon $3.7 billion of its total $28 billion in operating costs (13 percent) and increasing some from last quarter. That’s a cause for concern and also likely why Amazon is investing heavily to fine tune its logistics operations.

Aside from big jumps in Prime membership and AWS growth, Amazon’s team said devices were among the quarter’s big heroes.

“Customers purchased more than twice as many Fire tablets than first quarter last year,” Amazon CEO Jeff Bezos wrote in the earnings release. “Echo, too, is off to an incredible start, and we can’t yet manage to keep it in stock, despite all efforts.”

This is now the fourth quarter in a row that Amazon has turned a profit, which begs the question if this is the new normal for a company that almost resisted the urge to make a profit for nearly all of its 21 years as a company.

Are investors finally getting a taste of what Bezos promised more than a year ago when it racked up $544 million in losses in 2015’s Q3 alone on more than $20 billion in revenue? (A feat that many analysts, at the time, remarked required a lot of skill.)

“The numbers are great for Amazon,” said Forrester Analyst Sucharita Mulpuru. “Overall, the company still has economics that aren’t as strong as other public retailers and are much worse than other established technology companies. That will be their challenge to overcome in the years forward.”

But, for now, Amazon has delivered strong sales and a rising profit for four quarters running.