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Amazon rides high on sales growth, especially in cloud services

Amazon's share price climbed 2% on news of strong second-quarter sales growth boosted by a 58% year-on-year rise in sales of cloud services

Amazon has reported profits of $857m in the second quarter, up from $92m in the second quarter of 2015 and an increase of 67% on the first quarter of this year.

Net sales for the quarter rose 31% year on year to $30.4bn, helped by the favourable impact of year-on-year changes in foreign exchange rates throughout the quarter that brought in another $166m.

The second strong quarter in a row has boosted investor confidence, taking the company’s share price up 2% in after-hours trading.

The increase makes Amazon founder and chief Jeff Bezos the world’s third richest man, according to Forbes, which estimates his worth at $65.3bn.

The company’s cloud infrastructure business, Amazon Web Services (AWS), achieved 58% growth in sales to $2.9bn compared with the same period a year ago, and now accounts for more than 9% of total sales.

During the quarter, Salesforce selected AWS as its preferred public cloud infrastructure provider and announced it would start using AWS in its core services.

Series of firsts

Other second-quarter AWS news included the announcment of the industry’s first fully managed and cloud-based file system (Amazon Elastic File System) and the launch of a sixth Asia Pacific region in India. Amazon also achieved FedRamp high compliance certification, allowing US government agencies to use the AWS cloud for sensitive applications and workloads such as patient records, financial data and law enforcement data.

Amazon said the second annual Prime Day during the quarter was its biggest day ever, and a record day for Amazon devices globally. Compared with Prime Day 2015, worldwide orders grew by more than 60%, the company said.

Amazon launched its Prime service in more than 100 cities in India and plans to introduce Prime Video to give the Indian market access to Amazon original series and movies, and premium movies and TV shows from Indian and global content providers.

“It’s been a busy few months for Amazon around the world, and particularly in India,” said Bezos. “The team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response.”

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During the quarter, Amazon added new features to its Fire TV streaming media player in the US, introduced a thinner and lighter Kindle e-reader, launched Amazon Video Direct to enable creators to make their video content available to Amazon customers, announced a partnership between Amazon Prime Air and the UK government to progress the safe use of drones for small parcel delivery, and launched an AmazonFresh grocery service in London – its first non-US site.

Looking ahead to the third quarter, Amazon said it expects net sales of between $31bn and $33.5bn or growth of between 22% and 32% compared with third-quarter 2015.

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