Amazon revenue beats, cloud computing more profitable than expected

Thu Apr 23, 2015 9:43pm EDT
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By Nandita Bose and Lehar Maan

(Reuters) - Inc's first-quarter revenue grew more than expected as rising sales in North America and its burgeoning cloud-computing services unit offset new business investments, boosting its shares nearly 7 percent.

The e-commerce company for the first time broke out financial details of its secretive cloud computing unit, Amazon Web Services, on Thursday, saying revenue jumped almost 50 percent to $1.57 billion, or about 7 percent of total revenue.

The unit's operating income grew 8 percent to $265 million.

Amazon shares rose $26.01 to $416 in extended trading, after closing slightly higher at $389.99 on Nasdaq.

Chief Executive Jeff Bezos revealed in a statement that Amazon Web Services is a $5 billion business and its growth is accelerating.

"We're putting a lot of capex (capital expenditure) there, and we think over time we will be able to generate significant free cash flow," Chief Financial Officer Tom Szkutak said on a conference call.

Cloud computing has turned out to be more lucrative than expected, Wedbush Securities analyst Michael Pachter noted. "Amazon's Web service is profitable, and apparently was a year ago as well. Everybody thought it was losing money ... and is probably a bit smaller than people thought it was."

Amazon's sales from North America rose 24 percent to $13.4 billion in the quarter ended March 31, the company said.   Continued...

A woman holds an Amazon Fresh delivery bag in Brooklyn, New York October 23, 2014. REUTERS/Brendan McDermid