Amazon ad revenue slows to (only) 34% growth

Slowdown in retail giant's 'other' services is greater than expected.

Amazon: total Q1 revenue grew 17%
Amazon: total Q1 revenue grew 17%

Amazon’s ad revenue growth slowed sharply in the first three months of this year.

In its first-quarter earnings report, the online retail giant posted 34% year-on-year growth in "other" business activities to $2.72bn (£2.11bn). 

This number consists almost entirely of advertising sales. Last year, Amazon enjoyed a year-on-year doubling of ad revenue, which surpassed $10bn for the first time in 2018.

The slowdown in ad revenue growth means that it is no longer the fastest-growing area of the business, despite it still being a relatively small part of Amazon’s overall revenue.

EMarketer's senior forecasting director, Monica Peart, said the slowdown in other revenues was more pronounced than expected.

"[The slowdown] showcases the moderating sales for third-party sellers as the platform seeks to maximise profitability, at some cost to these sellers," Peart explained.

Meanwhile, its lucrative cloud computing division, Amazon Web Services, grew 42% to $7.7bn for the quarter, although that is slower than its 49% growth rate last year. Subscription services (Amazon Prime) also grew at 42% to $4.34bn. 

Amazon's financial reports now fully include Whole Foods Market, the grocery business it bought in 2017. "Physical stores" had virtually flat growth for the quarter, with revenue up 1% $4.31bn.

Online stores, the bulk of Amazon’s business, grew 12% to $29.5bn.

Amazon posted a 17% rise in revenue (reported as net sales) to $59.7bn for the three months ending 31 March. 

Its annual total revenue for 2018 came in at $232.9bn, which is a higher figure than the gross domestic product of all but 47 of the world’s nations, according to International Monetary Fund figures.

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