|Amazon sales soar as pandemic fuels online shopping|
PUBLISHED THU, JUL 30 20203:32 PM EDT
UPDATED 25 MIN AGO
Annie Palmer @ANNIERPALMER
-- Amazon reported its second-quarter results after the closing bell on Thursday, trouncing earnings expectations and reporting double-digit revenue growth year over year.
-- Amazon will spend billions of dollars more on coronavirus-related initiatives in the third quarter.
-- The company confirmed this year’s Prime Day shopping event will take place in the fourth quarter.
Amazon reported blowout second-quarter results on Thursday, including a huge beat on the top line and double-digit revenue growth year-over-year. The stock climbed about 4.9% after hours.
Here’s how the company did:
Earnings: $10.30 vs. $1.46 expected, according to analysts surveyed by Refinitiv
Revenue: $88.91 billion vs. $81.56 billion expected, according to analysts surveyed by Refinitiv
Amazon said it expects to spend more than $2 billion during the third quarter on additional coronavirus-related measures, including procuring personal protective equipment, deep cleaning its facilities and wage increases for employees, among other things. Last quarter, Amazon said it would spend all of its estimated $4 billion profit between April and June on similar efforts.
“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 the release. “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 in this time of high demand.”
Amazon CFO Brian Olsavsky told CNBC’s Deirdre Bosa that consumer demand continues to be strong, especially among Prime subscribers. The company saw a shift in consumer demand during the second quarter, after shoppers flooded the platform with purchases of consumables and groceries, categories that aren’t “super profitable” for the company.
Amazon, like many other retailers, was caught off guard by the influx of online orders hitting the platform during the pandemic, resulting in delivery delays and supply chain shortages. One- and two-day shipping have since recovered somewhat but are “probably considered behind the going in rate,” Olsavsky said on a call with analysts.
Amazon usually sees softer sales during the second quarter compared to peak periods later on in the year, Olsavsky said.
The company was able to secure additional capacity in its fulfillment centers to absorb demand, pulling “capacity we didn’t think we’d need until 2021,” but it’s still running out of space heading into the third and fourth quarters, Olsavsky said. “We’ve got our hands full on that challenge,” he added.
Amazon also confirmed it will hold its annual Prime Day shopping event in the fourth quarter. Earlier this month, Amazon confirmed it would postpone this year’s Prime Day as a result of coronavirus concerns, but it stopped short of providing a date. The company previously told third-party sellers to use the week of Oct. 5 as a “placeholder date.”
For the third quarter, Amazon said it expects net sales to come in between $87 billion and $93 billion, representing year-over-year growth between 24% and 33%. The company anticipates a range of an operating income of $2 billion and $5 billion, which factors in additional coronavirus-related investments.
Consumers have increasingly ordered their groceries online as many continue to stay indoors during the pandemic. Amazon said online grocery sales tripled year-over-year in the second quarter. The surge in demand caused it to increase grocery delivery capacity by more than 160%, while it added additional grocery pickup locations around the country to fulfill more online orders.
Revenue for Amazon’s cloud-computing unit, Amazon Web Services, came in at $10.81 billion for the quarter, up 29% year over year, but decelerating slightly from the 33% growth it reported in the first quarter. Cloud services like Amazon’s have become crucial to organizations during the pandemic as many of their employees have shifted to remote work.
Amazon’s “other” category, which is primarily made up of its advertising business, generated $4.22 billion in revenue, up 41% year over year. Subscription services, which includes revenue from Prime memberships, were up 29% year-over-year to $6.02 billion.
Third-party sales grew 52% year-over-year during the quarter, outpacing growth in Amazon’s first-party sales, which increased 48% year-over-year.
This is breaking news. Please check back for updates.