×
You will be redirected back to your article in seconds

Amazon Posts Record Profit in Q1 of $3.6 Billion, Plans to Upgrade Prime to Free One-Day Shipping

Amazon.com handily beat Wall Street estimates for profit for the first quarter of 2019 — reporting $3.6 billion net income, more than twice the year-ago period and an all-time quarterly record for the ecommerce behemoth. In addition, the company revealed that it’s undertaking a shift in its Prime free-shipping program to deliver orders in one day instead of the standard two-day offer currently.

In the second quarter, Amazon expects to spend $800 million on upgrades related to moving the Prime free-shipping program from two days to one, CFO Brian Olsavsky said on the earnings call. He noted that Amazon has already provided free one-day — and even same-day — shipping for a selection of products in the past, but the new Prime program will be focused on making one-day shipping standard.

“By moving to one day [shipping], we increase the convenience and selection,” Olsavsky said. “We really think it’s going to be groundbreaking for Prime customers, and we’re very excited to add this capability.”

The free one-day shipping will be rolling out to Prime markets worldwide, according to Olsavsky. In the U.S., Amazon Prime membership costs $119 per year or $12.99 per month.

In Q1, Amazon’s sales increased 17% to $59.7 billion, with net profit more than doubling in the first quarter to deliver earnings of $7.09 per diluted share. Analyst consensus estimates were for revenue of $59.65 billion and EPS of $4.72. The company’s guidance for Q1 was for net sales of between $56 billion and $60 billion (below analysts’ prior estimates of $60.8 billion).

Amazon’s AWS cloud division again thundered to impressive growth, with revenue up 41% to $7.70 billion (in line with Wall Street estimates). Revenue in the company’s “Other” segment — which primarily comprises ad sales — rose 34% year-over-year, to $2.72 billion. Amazon’s subscription services grew 40%, to $4.34 billion; that category includes fees associated with Amazon Prime, as well as audiobook, digital video, e-book, digital music, and other non-AWS subscription services.

As it gets bigger, Amazon’s growth it slowing down. For Q2, the company expects sales of $59.5 billion-$63.5 billion (up 13%-20% year-over-year). Operating income is expected to be between $2.6 billion-$3.6 billion (versus $3.0 billion in Q2 2018), which factors in spending to upgrade Amazon’s Prime free-shipping program from two days to one.

Among other points the company called out in its earnings release, Amazon noted that its Fire TV line of connected devices now has more than 30 million active users, as previously announced.

The company also called out its cease-fire with Google in their fight over video-streaming apps. The two companies over the next few months planning to launch an official YouTube app on Amazon Fire TV devices and Fire TV Edition smart TVs, as well as the Prime Video app for streaming to Chromecast and Chromecast built-in devices. Prime Video will also be broadly available across Android TV device partners, and the YouTube TV and YouTube Kids apps will also come to Fire TV later this year.

During Q1, Amazon Studios greenlit more than 20 new and returning local original series, including “La Templanza” in Spain, “Wir Kinder vom Bahnhof Zoo” in Germany, “Bandish Bandits” in India, “El Presidente in Mexico,” and “The Bachelorette” in Japan.

On the Prime Video front, the service debuted original series “Hanna,” billed as a thriller/coming-of-age drama, based on the 2011 film, and announced the series was picked up for season two. Additionally, the film “Guava Island” starring Donald Glover and Rihanna launched on Prime Video after it premiered at Coachella.

Last fall, Amazon announced its “HQ2” plans for a second base of operations in North America would be split between Queens in New York City and the Crystal City neighborhood in Arlington, Va., just south of Washington, D.C. But the company nixed plans for the NYC outpost after encountering political opposition, particularly over the more than $2 billion in tax incentives it was set to receive.

Separately, earlier this month Amazon CEO and founder Jeff Bezos reached final terms on his divorce from his wife, MacKenzie, under which Jeff is retaining 75% of the couple’s Amazon shares as well as full voting control of 100% of the stake. MacKenzie Bezos will own shares representing about 4% of Amazon’s outstanding common stock, meaning Jeff Bezos will retain a 12% stake — and keeping his status as the world’s wealthiest individual.

More Digital

  • New, Likely Cheaper Galaxy Home Speaker

    Samsung Is Getting Ready to Introduce Second Smart Speaker

    Samsung still isn’t selling its Galaxy Home smart speaker, but the company may be getting ready to introduce a second model soon: An FCC filing for an “AI speaker” suggests that the new model, like the original Galaxy Home, will be dual-branded, featuring both Samsung’s own brand name as well as that of its audio [...]

  • Streaming Placeholder

    TikTok Owner Preparing Streaming Service to Rival Spotify (Report)

    ByteDance, the Beijing-based owner of the TikTok video app, is developing a paid streaming music service aimed at the same emerging markets that Spotify and Apple are seeking to explore, according to a report in Bloomberg. The app could be introduced as early as autumn, according to the report, which adds that the company has [...]

  • VidCon-Now-Stacey-Kelly

    VidCon Launches First Original Series to Promote Creators Year-Round

    VidCon brings together thousands of fervent fans at its annual conventions, who flock to the events to see their favorite YouTubers and other digital celebs in the flesh. Now the Viacom-owned division is trying to keep the excitement burning during the VidCon off-season, too. This week VidCon is launching its first foray into original content [...]

  • Stranger Things

    Coca-Cola Will Revive New Coke in Alliance With Netflix, 'Stranger Things'

    A rush of TV watchers to streaming video has prompted Coca-Cola to test an interesting pour. Coca-Cola will bring New Coke back to market for a brief time, all part of a partnership with Netflix, which has featured Coke in its cult-favorite series “Stranger Things.” The third season of the series, set in 1985, will [...]

  • Lauren Dolgen Exits as BuzzFeed Studios

    Lauren Dolgen Exits as BuzzFeed Studios Boss After a Year

    Veteran TV producer Lauren Dolgen has departed as head of BuzzFeed Studios after one year in the job. BuzzFeed had hired Dolgen, a longtime MTV producer who worked on shows including “Teen Mom” and “16 and Pregnant,” as head of BuzzFeed Studios to oversee the company’s slate of original content. Based in L.A., she had [...]

  • Snap-Derek-Andersen-Lara-Sweet

    Snap Fills Out Senior Ranks With CFO, HR Chief Appointments

    Snap CEO and co-founder Evan Spiegel has turned in house to fill the company’s CFO and head of human resources positions, completing an overhaul of the Snapchat parent’s executive ranks after a series of high-level departures. The company announced the appointment of Derek Andersen, currently Snap’s VP of finance, as chief financial officer. Andersen will [...]

More From Our Brands

Access exclusive content