Amazon Just Reported Dismal Revenue for the Second Quarter
E-commerce giant Amazon has reported its financial results for the second quarter and missed on expectations for revenue as well as guidance for the third quarter.
From Amazon’s report last Thursday, the company revealed revenue of $113.08 billion. This is compared to the $115.06 billion that had been expected by analysts compiled by Bloomberg.
Earnings per share of $15.12 was higher than the $12.22 expected however, per Bloomberg.
AWS revenue was also higher than expected at $14.81 billion compared to $14.18 billion anticipated.
Shares had dropped as much as 5% as Wall Street digested the numbers.
Looking ahead the company has projected it will bring in between $106 billion to $112 billion. Analysts had been expecting $118.7 billion.
Analysts had been showing concerns that with the world reopened after the pandemic, consumers wouldn’t have to rely heavily on online shopping.
“As the quarter progressed, people were at home less as restrictions and lockdowns eased in some of our largest geographies, including the U.S. and much of Europe. As a result, while Prime members continue to spend more with us, growth in Prime member spend moderated compared to spending seen during the peak of the pandemic,” said CFO Brian Olsavsky on the earnings call to analysts.
Olsavksy added, “2019 full-year growth was 22%, and revenue growth for the first two months of 2020 was 21%. Once the pandemic hit and lockdowns began in March 2020, the initial growth rate jumped into the mid-30% range. Q1 of last year ended with a revenue growth rate of 27%. However, our operations network took time to step up to serve this growth in demand due to space constraints and our need to ramp up hiring quickly while prioritizing employee health and safety.”
“By mid-May of last year, we have made good progress to open up more capacity by adding hundreds of thousands of employees. This allowed our revenue growth rate to jump to the 35% to 45% range and remained at that level through Q1 of this year when we had 41% growth. In Q2 of this year, we began to comp this high sales period from last year, and the year-over-year revenue growth rate has narrowed. It has also narrowed as vaccines become more readily available in many countries and people are getting out of their homes,” he continued.
Amazon is also facing an ongoing Federal Trade Commission investigation into its alleged use of third-party seller data to produce and sell its own Amazon Basics-branded goods.
The FTC is reviewing Amazon’s planned purchase of legendary Hollywood studio MGM for $8.45 billion as well.
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.