“Despite continued inflationary pressures on fuel, energy and transportation costs, we are making progress on costs,” said CEO Andy Jazzy.
Amazon Inc (AMZN) posted a second straight quarterly loss on Thursday but beat Street’s sales forecasts and posted solid gains from its market-leading cloud division, lifting shares sharply higher in after-hours trading.
Amazon said its second-quarter loss was estimated at $2 billion, or 20 cents a share, down from earnings of $0.76 a share in the same period last year and notably below the consensus forecast. of $0.13 per share. Amazon’s stake in Rivian Automotive (RIVN) cost the group about $3.9 billion, which it included in non-operating expenses.
Revenues rose 7.2% from a year ago to $121.2 billion, well above analysts’ estimates of $119.08 billion. Amazon Web Services contributed $19.74 billion, up 33% from last year. Ad sales were also higher, rising 18% to $8.76 billion. Sales from online stores, however, dropped 4.3% to $50.885 billion.
Walmart’s (WMT) profit alert from earlier this week, linked in part to higher-than-expected inventory levels and ongoing inflationary pressures that have squeezed profit margins, set the stage for a weaker reading from Amazon.
However, with the majority of its sales – 57% – filtering from third-party sellers, Amazon hasn’t suffered the same inventory bloat, and its cash-generating web services division has helped offset the decline in online sales.
“Despite continued inflationary pressures on fuel, energy and transportation costs, we are making progress on the more manageable costs we mentioned in the last quarter, particularly by improving the productivity of our service network,” said CEO Andy Jassy.
“We are also seeing revenue accelerate as we continue to make Prime even better for members, investing in faster shipping speeds and adding exclusive benefits like free Grubhub delivery for a year, exclusive access to NFL Thursday Night Football games from September. 15, and releasing the highly anticipated The Lord of the Rings: The Rings of Power series on September 2,” he added.
Amazon shares were marked 12% higher in after-hours trading immediately after the results were released to indicate a Friday opening bell price of $136.98 each.
Amazon completed its planned 20-for-1 stock split in early June, bringing the price per share closer to mega-cap tech pairs such as Apple (AAPL), Alphabet (GOOGL), and Meta Platforms (META).
Looking at the current quarter, Amazon said it sees operating income between zero and $3.5 billion, with revenues in the range of $125 billion to $130 billion, compared to Refinitiv’s forecast of around $130 billion. $126.5 billion.
“Despite a further Fed rate hike, inflationary pressure and heightened market volatility, Amazon had a strong second quarter,” said Krista Morgan of Stage, a mostly female-led private equity group based in Denver.
“The company managed to exceed expectations and outperform competing retail giants, such as Walmart, which were forced to reassess profit margins,” he added. “This is likely in large part due to the company’s cloud business, Amazon Web Services. As consumers shunned retail and electronics to cut costs, cloud services have remained stable and in demand.”
