Massive growth shows why Amazon is the public cloud leader

Amazon released their fiscal first-quarter earnings report on Thursday, reporting net revenue of $29.1 billion, up twenty-eight percent from compared to the same time past year.

Both sales and profits were higher than analysts had been expecting and Amazon shares jumped in after hours trading. The revenues showed an increase of 28% compared to $22.72 billion previous year which had witnessed a loss of 12 cents per share.

For the current quarter ending in July, Amazon said it expects revenue in the range of $US28 billion to $US30.5 billion. Still, Amazon's 20-year-old retail operations continue to be supported by its 10-year-old cloud business: Amazon Web Services revenue increased a hefty 64% up to $2.57 billion, from $1.57 billion year over year.

Amazon's stock spiked by more than 11 percent during after-hours trading.

As Amazon Q1 profits soared, the e-commerce retailer experienced its most profitable quarter ever.

Even though operating margins fell at the unit compared to last quarter, as Amazon spends heavily to compete with rivals like Microsoft and Google, they remain a healthy 27.9 per cent. The rest of Amazon's business, which accounts for 90 percent of overall revenues, reported an operating profit of $467 million.

Founder Jeff Bezos also hailed the performance of Amazon's own devices such as the Fire TV Stick and the Echo voice-response system.

This is not the first time that Amazon set up modest guidance for the first quarter and then proceeded to crush that easy target. Amazon had also missed forecasts in its previous quarter, leaving some shareholders anxious about its comparatively thin profit margins.

Net sales also topped forecasts, rising 28% to $29.1 billion from $22.7 billion.

Shares of Inc. Amazon's recently released service called "Amazon Echo Smart Home Hub" has been gaining lot of popularity among its customers which has also helped the company to scale up its business. "AWS continues to become a very important source of revenues and profits", Dawson said. In theory, making it easier/cheaper to deliver things should convince customers to buy more, outweighing the increased shipping costs that the company would sustain.

Amazon has invested heavily in adding new television shows and films as well as introducing a new pay monthly option to tempt more consumers to take the plunge as it seeks to better compete with the likes of Netflix and Hulu.