Amazon's first quarter results blew past analyst expectations. When all was said and done, Amazon's net sales increased 28 percent for the period and profits were up for the fourth consecutive quarter.
On the retail side, Amazon saw Prime memberships for the quarter increase 47 percent in the U.S. In an earnings call with analysts yesterday, CFO Brian Olsavsky tied the increase to "a culmination" of investments the company has made in its own devices and original content.
"We are seeing tablets where we sold twice the volume in Q1 year-over-year. Fire TV Stick, you may have read in our press release that it has greater than 100,000 customer reviews, the most reviewed product ever; 62,000 or over 62,000 of those reviews are five-star reviews," said Mr. Olsavsky (via Seeking Alpha). "We've not only had the Echo, but we have the Echo Dot and Tab, so we're branching off that product line and having trouble keeping those in stock."
Amazon's original video content has played a significant role in attracting new Prime members, according to Mr. Olsavsky. The e-tailer recently launched a monthly subscription plan that enables members to stream videos of $8.99 a month, a dollar lower than Netflix. Amazon's CFO said the company plans "to significantly increase" spending on original shows over "the next few quarters."
Netflix is not the only retail rival being challenged. Amazon continues to invest in grocery product categories while building relationships with CPG companies through programs such as Dash.
"We continue to have a strong Fresh business in a number of cities in the U.S. We know customers love it. We're making good progress on the economics," said Mr. Olsavsky. "And you'll also notice that we have other ways for people to buy consumable products. We have Prime Pantry. We have Prime Now. So we're playing with a lot of different models to see what resonates with consumers and it'll guide our investment decisions going forward."
- Amazon.com Announces First Quarter Sales up 28% to $29.1 Billion - Amazon.com, Inc./Business Wire
- Amazon.com Q1 2016 Results (Earnings Call Transcript) - Seeking Alpha
- Amazon posts EPS of $1.07, shares pop 12% - CNBC
- Amazon profit crushes estimates as cloud-service revenue soars - Reuters
- Retail drama: Amazon undercuts Netflix - RetailWire