Amazon.com Inc on Thursday reported another record quarterly profit, fueled by the growth of online shopping and its cloud-computing service.
However, its revenue grew less than Wall Street analysts expected and Amazon’s shares fell after the results were released.
The company, based in Seattle, has boosted its profitability as it expanded far beyond online shopping.
For years, the company posted razor-thin quarterly profits, spending most of what it earned on building warehouses and making other investments, but that has changed as its Amazon Web Services unit, which provides cloud computing services to companies and government agencies, has become a major moneymaker for Amazon.
Amazon posted third-quarter profit of US$2.88 billion, its fourth straight quarter of profits higher than US$1 billion. In the same period last year, it reported third-quarter profit of just US$256 million.
On a per-share basis, it reported earnings of US$5.75, beating the US$3.29 per share that analyst expected, Zacks Investment Research said.
Revenue rose 29 percent to US$56.58 billion, but was less than the US$57.05 billion that analysts expected. Shares of Amazon.com Inc., which are up 50 percent so far this year, on Thursday fell 7 percent to US$1,655.98 in extended trading.
At Amazon Web Services, revenue jumped 46 percent to US$6.7 billion. In its “other” category, which is mostly made up of its growing advertising business, revenue more than doubled to US$2.5 billion.
Amazon is expected to face higher costs as it boosts pay for all its US workers to at least US$15 an hour starting on Nov. 1.
The company has not said how much the wage hikes would cost it and Amazon chief financial officer Brian Olsavsky declined to give a specific number when asked during conference calls with reporters and analysts.
About 400,000 workers at Amazon’s warehouses, as well as those at its Whole Foods grocery chain, are to receive pay increases.
Looking ahead, Olsavsky said that the company is “expecting a strong holiday season.”
However, its revenue forecast of US$66.5 billion to US$72.5 billion for the fourth quarter, which includes the holiday shopping season, was below the US$73.87 billion that analysts expected.
Rivals are hoping to steal some sales from Amazon by mimicking its fast delivery.
The target this holiday season, for the first time, will be offering free two-day shipping with no minimum purchase., but Amazon has already cemented loyalty with its Prime membership, in which members pay US$119 per year or US$12.99 per month for fast delivery, access to Amazon’s movie streaming service and other perks.
Olsavsky said that Amazon still has more than 100 million Prime members worldwide, even after raising its membership fees by 20 percent earlier this year.
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