A day after Jeff Bezos downplayed Amazon’s power, posts record earnings

After Amazon warned of turbulent times ahead during the coronavirus and CEO Jeff Bezos downplayed the company’s leadership position before Congress on Wednesday, Amazon went ahead and posted massive gains in the second quarter.

The company reported a profit of $ 5.2 billion, or $ 10.30 a share, an all-time record on Thursday, and double that of last year’s total. That record came even after the company poured $ 4 billion during the quarter in their coronavirus response to protect their workers and customers. Chief Financial Officer Brian Olsavsky said another $ 2 billion will be spent in the current third quarter.

Revenue increased 40%, the largest increase in two years. Analysts had expected earnings of $ 1.46 per share and revenue of $ 81.5 billion, according to Yahoo Finance.

Shares were up 5% after hours.

Olsavsky said the windfall came from Amazon being able to ship much more than expected, as well as a change in the type of goods consumers were buying. At the start of the pandemic, shoppers focused on low-profit items like toilet paper, masks, and groceries, so Amazon hoped to break even in these sales due to its higher coronavirus costs. Instead, much more profitable things began to be sold as well, resulting in much more money. Amazon Web Services and the advertising business also performed well, he said.

Olsavsky said Prime’s one-day and two-day shipping times, which have been delayed for months during the viral outbreak, are improving, but he did not have a timeline for when shipping times will return to normal.

“We have seen the recovery of one day and two days during the quarter,” he said in an analyst call on Thursday, “but it is still considerably below the entry rate, before this occurs.”

Also he said Prime Day was moved to the fourth quarter of this year. The company previously confirmed only that the sales event was delayed amid the pandemic.

Already the king of US e-commerce, Amazon is about to become even more dominant after the coronavirus pandemic, which has forced more people to shop online. Amazon already accounts for 38% of US online sales. Signs of massive e-commerce growth are largely showing up this earnings season, with PayPal reporting a surge in digital payments on its network, the provider of E-commerce tools Shopify posts earnings as more retailers sell online, and UPS reports an increase in Residential Shipping.

Amazon’s sales growth was widely expected to be just as impressive, and that’s shown by Amazon’s rising share price. Bezos, the world’s richest person and Amazon’s largest shareholder, added $ 65 billion this year to his enormous wealth, totaling $ 180 billion.

While this optimistic image presumably would make most corporate CEOs ridiculously happy, Bezos has reason to be concerned. He was called to Congress just a day earlier for a antitrust hearing, with Republican and Democratic lawmakers accusing Amazon and other Big Tech companies of monopolistic practices. Bezos defended his company by saying that it represents less than 1% of the global retail industry, a statistic that belies its massive influence on e-commerce and includes categories in which it does not compete. Representative David Cicilline, chair of the antitrust subcommittee, said that some of these corporations will need to be divided and all will have to be regulated.

Also, Amazon’s growth during the coronavirus has not been easy. The e-commerce giant, after training generations of customers to wait for two-day shipments, faced major delays in their shipping times during the pandemic. In addition, it has had to deal with a shortage of products, rising prices in its market and repeated protests by its warehouse workers to obtain better protection against the virus.

Those setbacks have provided an opportunity for rivals like Target and Walmart, causing Amazon to lose market share in recent months.

Some of these issues appear to have been mitigated, with warehouse employee equipment widely available, but Amazon still faces shipping delays months after the crisis. During the company’s previous quarterly report, Bezos warned of big expenses to protect workers and customers from the virus, saying $ 600 million was spent in the first quarter and $ 4 billion in the second quarter.

Profits in e-commerce are also proving to be a zero sum game. While online sales in the United States are projected to have increased 23% in the second quarter, physical sales are down 24%, according to eMarketer. That sparked another wave of bankruptcy filings, from JC Penney, Neiman Marcus, and J. Crew, after many traditional retailers, including RadioShack and Toys R Us, had already collapsed.

Adding to that, Amazon’s huge earnings report comes the same day the federal government reported a massive slowdown in the economy last quarter and more than 1.4 million weekly unemployment claims.

Amazon forecast that sales will continue to rise sharply in the third quarter, anticipating growth from 24% to 33%.

Shipping costs increased 68% from a year earlier, a large increase from prior quarters, and the workforce during the quarter increased 34% from a year earlier. The company said Thursday that its combined number of regular and seasonal employees now exceeds one million.