Amazon (AMZN) earnings Q2 2020

Amazon CEO Jeff Bezos

Alex Wong | Getty Images

Amazon reported blowout second-quarter results on Thursday, including a huge beat on the top line and double-digit revenue growth year-over-year. The stock climbed about 4.9% after hours after the company beat on both the top and bottom lines.

Here’s how the company did: 

  • Earnings: $10.30 vs. $1.46 expected, according to analysts surveyed by Refinitiv
  • Revenue: $88.91 billion vs. $81.56 billion expected, according to analysts surveyed by Refinitiv

Amazon said it expects to spend more than $2 billion during the third quarter on additional coronavirus-related measures, including procuring personal protective equipment, deep cleaning its facilities and wage increases for employees, among other things. Last quarter, Amazon said it would spend all of its estimated $4 billion profit between April and June on similar efforts.

“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Amazon CEO Jeff Bezos said in the release. “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand.”

Amazon CFO Brian Olsavsky told CNBC’s Deirdre Bosa that consumer demand continues to be strong, especially among Prime subscribers. The company saw a shift in consumer demand during the second quarter, after shoppers flooded the platform with purchases of consumables and groceries, categories that aren’t “super profitable” for the company. Once this happened, Amazon was able to “ship a lot more,” as a result of capacity increases and more than $9 billion of investments in logistics. 

“The initial data we had was that sales and demand were going thru the roof but heavily targeted toward consumables and safety and groceries,” Olsavsky said. “What we saw in Q2 was not only did the mix start to shift back to a more normal mix, but we were also able to ship a lot more.”

For the third quarter, Amazon said it expects net sales to come in between $87 billion and $93 billion, representing year-over-year growth between 24% and 33%. The company anticipates a range of an operating income of $2 billion and $5 billion, which factors in additional coronavirus-related investments. 

Consumers have increasingly ordered their groceries online as many continue to stay indoors during the pandemic. Amazon said online grocery sales tripled year-over-year in the second quarter. The surge in demand caused it to increase grocery delivery capacity by more than 160%, while it added additional grocery pickup locations around the country to fulfill more online orders. 

Revenue for Amazon’s cloud-computing unit, Amazon Web Services, came in at $10.81 billion for the quarter, up 29% year over year, but decelerating slightly from the 33% growth it reported in the first quarter. Cloud services like Amazon’s have become crucial to organizations during the pandemic as many of their employees have shifted to remote work. 

Amazon’s “other” category, which is primarily made up of its advertising business, generated $4.22 billion in revenue, representing a 41% increase year over year. 

Third-party sales grew 52% year-over-year during the quarter, outpacing growth in Amazon’s first-party sales, which increased 48% year-over-year. 

This is breaking news. Please check back for updates. 

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