Amazon (AMZN) Second Quarter 2022 Results
Amazon shares soared more than 11% in extended trading on Thursday after the company reported better-than-expected second-quarter revenue and gave an upbeat outlook.
Here’s how the company did it:
- EPS: Loss of 20 cents
- Revenue: $121.23 billion vs. $119.09 billion expected, according to Refinitiv
Here’s how other key Amazon segments fared during the quarter:
- Amazon Web Services: $19.7 billion vs $19.56 billion expected, according to StreetAccount
- Advertising: $8.76 billion vs $8.65 billion expected, according to StreetAccount
Revenue growth of 7% in the second quarter beat estimates, bucking the trend among its Big Tech peers, which all posted disappointing results ahead of Thursday. Apple, along with Amazon, exceeded expectations.
Amazon said it expects to post third-quarter revenue between $125 billion and $130 billion, or growth of 13% to 17%. Analysts had expected sales of $126.4 billion, according to Refinitiv.
Amazon faced higher costs as pandemic-driven expansion left the company with too many workers and too much warehouse capacity.
“Despite continued inflationary pressures on fuel, energy and transportation costs, we are making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our distribution network,” CEO Andy Jassy said in a statement.
Amazon slashed its workforce from 99,000 to 1.52 million employees at the end of the second quarter after nearly doubling in size during the pandemic.
Amazon posted a $3.9 billion loss on its Rivian investment after the electric vehicle maker’s shares fell 49% in the second quarter. That brings its total loss on investment this year to $11.5 billion.
Due to Rivian’s writedown, Amazon posted an overall loss of $2 billion in the quarter. Analysts’ EPS estimates varied widely, making it difficult to compare actual results to a consensus number.
Rivian CEO RJ Scaringe and Udit Madan stand in front of the new Rivian-powered Amazon EV pickup truck. Amazon and Rivian unveil their latest custom electric delivery vehicles (EDVs) to begin using them for customer deliveries, in Chicago, Illinois on July 21, 2022.
Jim Vondruska | Reuters
Amazon’s core e-commerce business continues to suffer as online sales are no longer booming as they were during the height of the Covid-19 shutdown. The company’s online store segment was down 4% year-over-year. Physical store sales continued to rebound from the prior year period, growing 12%.
Amazon’s advertising business is a bright spot in an otherwise dismal quarter for online advertising, and shows the company is taking a stake in one of its fastest growing businesses.
Advertising revenue rose 18% over the period. Facebook, meanwhile, recorded its first-ever drop in revenue and forecasts another decline for the third quarter. At Alphabet, advertising growth slowed to 12% and YouTube recorded a dramatic deceleration to 4.8% from 84% a year earlier.
Among other big tech companies, Microsoft also reported disappointing results this week. Apple beat on the high and low lines, increasing the stock in after-hours trading.
Amazon’s cloud segment continues to buzz. Amazon Web Services sales jumped 33% from a year earlier to $19.74 billion, above the $19.56 billion forecast by Wall Street.
Operating profit, which excludes the investment-related loss, fell to $3.3 billion from $7.7 billion a year earlier. AWS generated operating income of $5.7 billion, representing all of Amazon’s earnings plus a portion during the period.
The upbeat results could also help improve the mood around Jassy, who replaced Jeff Bezos as CEO just over a year ago. Jassy’s first year on the job has been marred by challenges, including an ongoing labor battle, market downturn, mounting regulatory pressure and an exodus of top talent.
He’s also under pressure to show he can get Amazon’s core retail business back to the growth investors have grown accustomed to, a difficult task given the macro pressures the company faces, such as than soaring inflation and slowing consumer discretionary spending.
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