Amazon Reports Impressive Results, Issues Positive Guidance For The Next Quarter

Shares of e-commerce company Amazon were up more than 13 percent in Thursday’s extended trading after the company reported quarterly results that surpassed the estimates of analysts. The company also issued positive guidance for the third quarter.

In the second quarter, Amazon had a loss of 20 cents in earnings per share. Revenue came in at $121.23 billion compared to the forecast of $119.09 billion from analysts, according to Refinitiv.

Amazon Web Services reported $19.7 billion, surpassing the estimate of $19.56 billion from analysts, according to StreetAccount. Advertising came in at $8.76 billion, also beating analysts’ estimate of $8.65 billion, according to StreetAccount.

Although revenue growth came in at 7 percent in the second quarter, compared to other companies that have released disappointing earnings results in the face of inflation and other macroeconomic challenges, Amazon did pretty well.

For guidance, Amazon forecasts third-quarter revenue of between $125 billion and $130 billion. This will represent a growth of between 13 percent and 17 percent. According to Refinitiv, analysts expect revenue of $126.4 billion for the third quarter.

The company, like others, has been dealing with increased costs. The company which had increased hiring due to the pandemic is now left with too many workers and free warehouse capacity. In a statement, CEO Andy Jassy who recently took over from Jeff Bezos said that “Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network.”

As of the second quarter’s end, Amazon cut down its workforce by 99,000 people and is now left with 1.52 million employees. Chief Financial Officer Brian Olsavsky on the earnings call said that the company will continue to hire engineers for units like Amazon Web services and hiring while increasing caution for hiring in other units. “I think it’s right for people to step back and question their hiring plans. We’re doing that as well. I don’t think you’ll see us hiring at the same pace we did over the last year, or the last few years,” he said.

The company’s investment in electric car company Rivian brought it a $3.9 billion loss after the company’s shares dropped 49 percent in the second quarter. This raises the company’s total loss on investment so far this year to $11.5 billion. In the second quarter, Amazon had a total loss of $2 billion.

Online sales have reduced from pandemic levels and this took a toll on the company’s core e-commerce business. Its online store segment dropped 4 percent year-over-year in the second quarter. Physical store sales, on the other hand, grew 12 percent.

Advertising revenue went up 18 percent. This was while other companies were experiencing a decline in their advertising revenue. The company’s cloud segment was up 33 percent year-over-year to 419.74 billion, surpassing the estimate of $19.56 billion from analysts. Operating income came in at $3.3 billion compared to $7.7 billion reported for last year. This excludes the investment-related loss. Amazon Web Services reported an operating income of $5.7 billion.