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Amazon Blows Doors Off Q2 With Record Profit, Jeff Bezos Hypes Prime Video Plans for India

Company expects to double video-content spending in second half of 2016

E-commerce giant Amazon topped Wall Street expectations for the second quarter of 2016 in dramatic fashion, posting record quarterly net income of $857 million as net sales rose 31% to $30.4 billion.

The company reported Q2 earnings of $1.78 per diluted share, versus 19 cents a year earlier, Amazon’s fifth straight quarter of posting a profit (and third straight quarterly record for profits). Analysts expected revenue of $29.55 billion with earnings of $1.11 per share.

In announcing the results, founder and CEO Jeff Bezos called out the launch earlier this week of the Amazon Prime membership program in India, offering customers in more than 100 cities unlimited free one-day and two-day delivery on hundreds of thousands of products. Amazon Prime Video is “coming soon” to the country, which will offer Prime members in India exclusive access to Amazon Studios’ original series and movies and will include original content featuring top Indian creators and talent.

“The team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response,” Bezos said in a statement.

Amazon’s earnings again were boosted by continued strong growth of the Amazon Web Services cloud-computing services division. AWS sales totaled $2.89 billion in the quarter, up 58% year over year, while operating income more than doubled to $718 million.

Amazon Prime Video is available in the U.S., the U.K., Germany, Austria and Japan, with India its first market expansion for the service since launching in Japan in September 2015. The company doesn’t disclose numbers on Prime subscribers; in a research note last month, Sanford Bernstein estimated that Amazon has between 58 million and 69 million Prime members worldwide.

On the earnings call with investors, CFO Brian Olsavsky said Amazon expects to double its content spending in the second half of 2016 versus the same period in 2015, as it nearly triples the number of Amazon original TV shows and movies. He declined to provide specific figures on spending. Last year, Amazon said it spent $1.3 billion on Prime Video content in 2014.

Amazon Studios original series scheduled to premiere this fall include new seasons of “Transparent,” “Mozart in the Jungle,” the second season of drama “The Man in the High Castle,” and new shows “Good Girls Revolt,” “Goliath” and “Crisis in Six Scenes,” Woody Allen’s first TV series, as well as “The Grand Tour,” the new series from former “Top Gear” hosts Jeremy Clarkson, Richard Hammond and James May.

On the film side, Amazon Studios has set a theatrical release this fall for movies including “Manchester by the Sea,” “The Handmaiden” and “Gleason,” joining Woody Allen’s “Café Society,” which bowed July 15 in theaters. The films will be available exclusively on Prime Video following their theatrical runs.

Amazon also highlighted the second annual Prime Day on July 12 as the biggest single day of sales in its history, and was also a record day for Amazon devices globally. Compared with Prime Day 2015, worldwide orders grew by more than 60%, while orders from third-party sellers with Prime Day deals nearly tripled. According to Amazon, Prime members saved over twice as much on deals over last year.

For the third quarter, Amazon said it expects revenue of between $31.0 billion and $33.5 billion (up 22%-32% compared with the third quarter of 2015), with operating income of $50 million to $650 million, compared with $406 million in the third quarter of 2015.

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