Amazon.com Inc forecast strong fall sales and posted a profit that was double market expectations on Thursday thanks to the retailer's higher-earning businesses, including cloud computing and advertising.
The world's largest online retailer has increasingly learned to compensate for the high costs of fast package delivery and video streaming by controlling expenses and building up higher-profit businesses. It was the first mover in the business of selling data storage and computing power in the cloud.
The company is also working to ship food from Whole Foods Market stores across the United States, in an ambitious attempt to bring groceries into the age of online retail.
The company said it expects an operating profit between $1.4 billion and $2.4 billion, up from $347 million a year earlier. The company also reported a second-quarter profit of $2.5 billion, its largest ever.
"A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising," Brian Olsavsky, Amazon's chief financial officer, said on a call with media. "We've seen a greater-than-expected efficiency in a lot of our spend in things like warehouses, data centers, marketing."
Highly profitable ad sales were a bright spot last quarter. The company said revenue from the category and some other items grew 132 percent to $2.2 billion.
The company is working to automate tasks for advertisers and to help media buyers measure the results, Olsavsky said.
Key to its allure has been that advertisers' placements result directly in sales, reaching customers on Amazon with an intent to shop.
Amazon Web Services (AWS) saw its operating profit margin expand from a year earlier. Sales picked up speed from the year prior, too, rising 49 percent to $6.1 billion.
Prime members spend above average on Amazon. The company said it now expects third-quarter sales of between $54 billion and $57.5 billion, up from $43.7 billion a year earlier.
Total net sales for the second quarter rose 39 percent to $52.9 billion, missing the average analyst estimate of $53.4 billion.