By Yoree Koh 

Amazon.com Inc. notched a fourth-straight record profit as it tamed costs, but its quarterly revenue grew at the slowest pace in nearly four years.

The e-commerce company reported its first-quarter profit more than doubled to $3.56 billion, or $7.09 a share, well above analysts' consensus estimate of $4.70 a share, according to FactSet.

At the same time, its revenue growth slowed for a fourth-straight period, in part because of weak international sales. Revenue grew 17% to $59.7 billion, compared with 43% growth in the year-earlier quarter.

Ahead of what is expected to be a heavy spending period, the company eased up. Expenses in the first quarter grew 12.6%, the lowest percentage in at least a decade.

For the current quarter, Amazon projected revenue of between $59.5 billion and $63.5 billion -- or 13% to 20% growth from a year earlier. Analysts project on average $62.4 billion in revenue for the second quarter.

Amazon's stock rose 0.6% in after-hours trading to $1,907 a share. The shares are up about 24% this year.

Amazon started delivering record quarterly profits last year as it eased spending while newer businesses like advertising and cloud computing took off, helping to offset the lower margins of its traditional retail business.

But its revenue growth has been decelerating quickly, partly because of how massive Amazon has become, but also due to some trouble spots. The company has run into problems overseas, particularly in India, where new e-commerce rules favor domestic companies over foreign giants like Amazon.

Amazon also recently pulled the plug on its third-party online marketplace in China after struggling to battle the incumbents there.

Its international sales rose 9% in the first quarter, compared with 19% growth in the fourth quarter.

Amazon's booming advertising business didn't appear to fare as strongly as it had in prior quarters. Revenue for its "other" category -- which is primarily derived from advertising -- rose 34% to $2.72 billion in the first quarter after nearly doubling year-over-year in the prior quarter.

Amazon also is pushing further into physical retail with cashier-less Amazon Go stores and bookstores -- and with little revenue growth to show for it. Its Whole Foods grocery chain, which it acquired in 2017, makes up the bulk of the category, where revenue rose only 1% in the latest period. In April, Amazon implemented a third round of price cuts on grocery items, primarily on produce and meats, and said it will introduce more discounts to Amazon Prime members.

Its biggest and brightest cash cow -- the cloud computing arm called Amazon Web Services -- continues to churn out profits. Sales rose 41% to $7.7 billion, while operating income jumped 59% to $2.23 billion.

In his annual shareholder letter earlier this month, Chief Executive Jeff Bezos pronounced his own bullish stance on the cloud-computing business. Still, after an early head start that has made it the dominant player in renting computing power to businesses and government agencies, Amazon is confronting stiffer competition from Microsoft Corp. and Alphabet Inc. On Wednesday, Microsoft said quarterly revenue at its Azure cloud-computing business rose 73% from a year earlier.

While Amazon demonstrated stronger financial discipline over the past year, it was widely expected to begin investing heavily again in its disparate businesses. The company had spent mightily in prior years to build out its warehouses to meet surging retail demand and to branch into new industries such as cloud computing, filmmaking and groceries.

In fact, on the company's fourth-quarter analyst call, Chief Financial Officer Brian Olsavsky warned of a pickup in spending. That doesn't appear to have happened yet. And it isn't clear from Amazon's guidance for operating income whether that will change in the second quarter. It expects between $2.6 billion and $3.6 billion in operating income, compared with $3 billion a year ago and analysts' consensus estimate of $3.11 billion.

Amazon's employee count, which totaled 630,600, fell by nearly 17,000 employees during the latest quarter. That represents only the second sequential decline and steepest drop since at least 2010.

Write to Yoree Koh at yoree.koh@wsj.com

 

(END) Dow Jones Newswires

April 25, 2019 17:39 ET (21:39 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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