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Amazon ramps up marketing spend by 36% as it posts US$3.6bn profit

Amazon made US$3.6bn in net income in the first three months of the 2019 calendar year, the company’s financial results reveal. The digital giant’s figures also show its marketing spend jumped from US$2.7bn to US$3.7bn over the period –  36% increase.

Amazon is the latest US tech giant to release its financial results for the American Q1, after Twitter posted a US$1.9bn profit, and Facebook announced a $2.4bn profit – a figure hampered by its setting aside of US$3bn in anticipation of its costs from the US Federal Trade Commission’s investigation into its data practices.

For the three months to 31 March, 2019, Amazon reported total net sales of US$59.7bn, up from US$51bn for the same period last year.

North America remains the company’s stronghold, with net sales in the region accounting for US$35.8bn of the total US$52bn. After operating expenses of US$33.5bn, the North American arm of the business had an operating income of US$2.29bn – up from US$1.15bn for the same period last year.

Its international operations were less successful. Net sales internationally climbed from US$14.88bn in the first three months of 2018 to US$16.19bn for the same period this year. With operating expenses of US$16.28bn – up from US$15.5bn last year – internationally, Amazon made a US$90m loss.

The loss, however, was far less significant than the US$622m it lost on its international operations during the first quarter of 2018.

Amazon Web Services’ net sales were US$7.7bn for the quarter, up from US$5.44bn for the corresponding period last year. Its operating income climbed to US$2.22bn, from US$1.4bn last year.

Amazon flagged the standard business risks to its operations – government regulation and taxation, inventory management, system interruptions, fraud, payment risks and new technologies – but noted “the current global economic climate amplifies many of these risks”.

The company offered guidance of net sales for the next quarter of between US$59.5bn and US$63.5bn, which is growth of between 13% and 20% on the same period last year. Operating income is expected to be between US$2.6bn and US$3.6bn, compared with US$3bn in April to June of 2018.

 

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