Amazon has reported revenue of $88.9bn in its Q2 results, obliterating Wall Street expectations and cementing its pandemic dominance.
The ecommerce giant made profits of $5.2bn in Q2 – doubling net income for the same period in 2019. It also surpassed the record $3.6bn first-quarter profits of 2019.
The Seattle headquartered firm reported earnings per share of $10.30. Analysts surveyed by Refinitiv had expected earnings per share of $1.46.
“Amazon had a blowout quarter,” said Martin Garner, chief operations officer at market intelligence firm CCS Insights.
“The Prime flywheel was a key driver, with rapid growth of new Prime users, as well as existing Prime users buying more and more frequently.”
Prime membership revenues were up 29% year-over-year, bringing in revenues of $6.02bn.
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Amazon Q2 results: “Another highly unusual quarter”
“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 a statement.
Amazons Q1 results, which only covered the tail-end of the first global peak of the coronavirus, indicated that the firm was well-placed to capitalise from lockdown restrictions – reporting revenue of $75.4bn for the period ended 31 March.
But Bezos, the richest man in the world, had sought to play down Amazon’s prospects, warning that coronavirus related costs could see Amazon losing money.
In Q2 Amazon spent more than $4bn on “incremental Covid-19 costs”, Bezos said. This includes personal protective equipment for employees, additional warehouse cleaning and the hiring of more than 175,000 people since March.
The tech giant was initially overwhelmed by the influx of orders when the pandemic first hit, creating logistics bottlenecks.
“Amazon’s capacity and logistics were stretched to the maximum during Q2, as it scrambled to cope with increased demand for its own products and a rapid increase in third party sellers switching to online selling,” said Garner.
But Amazon’s costs were far outstripped by the surge in demand for Amazon’s ecommerce service from a consumer base largely in lockdown. Spending habits also shifted from low-profit goods such as groceries to more profitable products, such as electronics.
Amazon Q2 results: AWS growth continues
Meanwhile Amazon’s lucrative cloud-computing segment, AWS, reported revenues of $10.81bn in Q2, marking 29% growth year-over-year.
“Many of its customers are looking to save money, including spending less with AWS, and AWS says it is helping them do that,” said Garner. “That is offset by new customers shifting their work more quickly to the cloud as a way of reducing costs.”
“What is interesting to note is that revenues from Amazon Web Services grew slower than previous quarters, at 29% compared to 37% in 2019Q2,” said Theo Delimaris, associate analyst at market intelligence firm MarketLine. “This is indicative of increasing competition in the cloud computing field, particularly from Google Cloud – up 43% in Q2.”
Amazon expects revenues between $87bn and $93bn for the third quarter. It expects to spend $2bn on Covid-related costs in Q3.
Amazon’s share price jumped 5% in after-hours trading following yesterday’s Q2 results announcement. Its share price is up more than 60% year-to-date.