Amazon beats expectations with $857 million in profit spurred by Prime and AWS

Amazon (AMZN) today released its earnings statement for the second quarter of 2016. The results: $857 million in net income, or $1.78 per diluted share, on $30.40 billion in revenue. Analysts were expecting $1.11 per diluted share on $29.55 billion in revenue.

The company’s stock closed the day up 2.16 percent at $752.61, but has gone up more than 2 percent in after-hours trading. It attributed its performance to the success of its Prime offering, as well as Amazon Web Services, which contributed $2.88 billion in revenue this quarter.

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In the first quarter of 2016 Amazon posted its highest profit ever — $513 million. That has now been exceeded by this quarter, which is an 831 percent annual increase.

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“It’s been a busy few months for Amazon around the world, and particularly in India — where we launched a new AWS Region, introduced Prime with unlimited free shipping, and announced that Prime Video is coming soon, offering Prime members in India exclusive access to Amazon Original Series and Movies — including original content featuring top Indian creators and talent,” said Amazon chief executive Jeff Bezos. “The team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response.”

This quarter was marked by the company’s second annual Prime Day, which it touted as being its “biggest day ever” — and it also happened to be a record day for its devices worldwide. Worldwide orders grew more than 60 percent and orders by third-party sellers with associated deals “nearly tripled,” the company reported.

This quarter also ushered in the arrival of Prime in India, where customers can now get unlimited free one-day and two-day delivery on goods. Eventually Prime Video will become available there, the company said in its earnings statement.

Its ecosystem continues to also grow, with more than 1,900 skills made available on Amazon’s Alexa platform, such as those from Kayak, Lyft, NBC, Honeywell, and others. More than 150 brands have been onboarded to Amazon’s Dash button offering, and its production house Amazon Studios continues to flourish, with 16 Emmy nominations and new shows scheduled to air later this year. Company chief financial officer Brian Olsvasky reportedly told Reuters that Amazon will be doubling its investment in original video for the second half of 2016 compared to a year ago.

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Amazon Web Services played a big role in the company’s quarterly performance. With $2.88 billion in revenue, its hosting product continues to be a cash cow for Amazon, generating 58 percent more cash this quarter.

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Could drones become a major market opportunity for Amazon? Perhaps, but it’ll have to see what comes out of its partnership with the U.K. government as it begins trialing delivery methods, including beyond-line-of-sight operation.

In terms of guidance, Amazon said it expects net sales to be between $31 billion and $33.5 billion next quarter, growing between 22 and 32 percent over last year. Operating income is expected to be between $50 million and $650 million.