Amazon.com Inc. Chief Executive Jeff Bezos promised to spend the expected profits amid a huge surge in sales related to the COVID-19 pandemic, but sales grew so fast that it ended with record profits.
Amazon AMZN,
reported second-quarter earnings of $ 5.2 billion, or $ 10.30 a share, on Thursday afternoon, nearly doubling from $ 5.22 a share a year ago to a new quarterly record amid a big surge in earnings. Amazon reported sales of $ 88.9 billion, a 40% increase from $ 63.4 billion from the previous year and well ahead of Amazon’s prediction of $ 75 billion to $ 81 billion. Analysts on average had forecast earnings of $ 1.48 per share on sales of $ 81.45 billion.
Three months ago, Bezos said he hoped to spend billions on expected operating profit that is flooding as Americans take refuge in place due to the coronavirus pandemic and buy more products online and companies spend more on computing in the cloud to support trapped workers in their homes. “If you are a shareholder in Amazon, you may want to take a seat because we are not thinking small,” Bezos said in May.
However, the shareholders did not flee. Instead, Amazon stocks continued to hit record highs, gaining more than 24% in the past three months and pushing the company’s market capitalization to more than $ 1.5 trillion. Shares rose more than 4% in post-hourly trading Thursday immediately after the results were released.
“This was another very unusual quarter, and I couldn’t be more proud and grateful to our employees around the world,” Bezos said in Thursday’s announcement. “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 at this time of high demand: purchase of personal protective equipment , increased cleanliness of our facilities, following new safety process routes, adding new backup family care benefits and paying a special bonus of more than $ 500 million to frontline employees and delivery partners ” .
Earnings in Amazon’s core business show why investors stick with Amazon, and more join them. The company said its e-commerce business grew 47.8% over last year in the second quarter to revenue of $ 45.9 billion from $ 31.05 billion, while analysts expected $ 39.89 billion. In North America, net sales online and in physical Amazon stores, such as Whole Foods Markets, grew to $ 55.44 billion from $ 38.65 billion a year ago, while overseas sales grew to $ 22.67 billion million of $ 16.37 billion.
Unit sales, which track Amazon’s actual physical orders, rose 57% in the quarter, a sharp increase from 18% growth in the prior-year quarter. In a conference call Thursday afternoon, Chief Financial Officer Brian Olsavsky noted that online grocery sales tripled in the quarter and that worldwide video streaming doubled from a year ago. However, Amazon’s physical stores experienced a 13% decrease.
Amazon Web Services, the company’s cloud computing arm, experienced revenue growth from $ 8.38 billion to $ 10.8 billion, while analysts on average expected $ 11 billion. As usual, AWS was the biggest profit driver for Amazon, with an operating profit of $ 3.36 billion, while Amazon reported overall operating income of $ 5.84 billion.
Even before the pandemic, Amazon had spent increasing its logistics operations to handle faster shipments for its Prime subscription service customers, and COVID-19 has brought that spending streak to hyperdrive. Amazon has already surpassed 1 million employees, Bezos revealed in planned testimony for an antitrust hearing on Wednesday in front of a congressional subcommittee, although because many are still listed as temporary, Amazon reported the number as 876,800 on Thursday.
“Our combined number of regular and seasonal employees is currently more than 1 million,” Olsavsky confirmed in prepared comments on Thursday.
Amazon said it expects revenue to be between $ 87 billion and $ 93 billion in the third quarter, and learned from its previous guide to expect profit, forecasting operating revenue of $ 2 billion to $ 5 billion, even when Represents $ 2 Billion in COVID-Related Costs- 19) Amazon generally arranges its Prime Day sale in the third quarter, but Olsavsky announced in his conference call Thursday that Prime Day will now be scheduled for the fourth quarter in all areas except India, where it will take place in August.
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