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Amazon’s Q2 profits surge to $2.5 billion

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Sales in quarter increase 39%, to $52.9 billion

SEATTLE — Amazon.com posted profits of $2.5 billion for the second quarter, up from $197 million a year earlier, on revenue of $52.9 billion. Operating profit margin came in at 5.6%.

It was the third consecutive quarter in which Amazon posted profit of $1 billion or more, extending its profitability streak to three years.

Amazon Web Services (AWS) yet again powered the company’s financial performance, contributing revenue of more than $6 billion, an increase of 49% from a year earlier. The cloud contributed 11.5% of Amazon’s revenue in the quarter ended June 30.

The growth keeps Amazon’s cloud well ahead of rivals’ including Microsoft and Google. But as Amazon continues to expand its retail ambitions through grocery stores and other brick-and-mortar initiatives, some of the nation’s most prominent retailers, including Walmart, Kroger Co. and Target Corp., have turned away from AWS and toward Microsoft to use its cloud services and productivity tools.

The one-year anniversary of Amazon’s acquisition of Whole Foods Market passed in June. The company celebrated the anniversary by expanding its Prime member benefits package to Whole Foods stores across the country.

On the health care front, Amazon in the second quarter acquired Boston-based PillPack, an online pharmacy that ships prepackaged doses of medication directly to customers. And Amazon’s joint venture with JPMorgan Chase and Berkshire Hathaway announced that Boston would be the home of a new health venture that will be managed by surgeon, Harvard Medical School professor and writer Atul Gawande.

In the July 26 earnings release, Amazon chief executive officer Jeff Bezos called out the company’s digital brain Alexa, which is now up to more than 45,000 skills, and some of the Alexa-powered devices that came out during the quarter.

“We want customers to be able to use Alexa wherever they are,” Bezos said. “There are now tens of thousands of developers across more than 150 countries building new devices using the Alexa Voice Service, and the number of Alexa-enabled devices has more than tripled in the past year. Our partners are creating a wide variety of new Alexa-enabled devices and experiences, including soundbars from Polk and Sonos; headphones from Jabra; smart home devices from ecobee and First Alert; Windows 10 PCs from Acer, HP and Lenovo; and cars from automakers including BMW, Ford and Toyota.”

Amazon said its headcount at the end of the second quarter was 575,700, bouncing back from the previous quarter, when the company posted its first decline in employment in several years. Amazon chief financial officer Brian Olsavsky said on a call with reporters that the company has slowed its external hiring, and most of the activity in recent months has come from internal transfers as part of “re-leveling” throughout the company.

Amazon’s blockbuster quarter contrasted with that of Facebook Inc., which late Wednesday said its growth was slowing, sending its stock plunging 19% on July 26. Amazon’s shares were up about 8% today to a 52-week high of above $1,817.


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