Amazon Reports Earnings and Says All of Q2 Profit Will Go to Responding to Coronavirus

E-commerce giant Amazon reported its earnings on Thursday after the bell and said it saw a heightened demand for products in the first quarter due to the coronavirus pandemic. Despite this, the company missed on both the top and bottom line for the quarter.

The company also said that it plans to spend all of its profit for the second quarter of this year, an estimated $4 billion, on its response to the coronavirus pandemic.

Shares fell roughly 5% in extended hours.

For the first quarter, earnings per share came in at $5.01 while revenue came in at $75.45 billion. Amazon Web Services (AWS) revenue was $10.22 billion. Wall Street had been expecting earnings of $6.25 a share and revenue of $73.61 billion per Refinitiv estimates. Amazon Web Services revenue was expected to come in at $10.33 billion per FactSet estimates.

“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Amazon said in the press release. “Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances.”

Amazon CFO Brian Olsavsky told CNBC’s Deirdre Bosa that he expects the company will spend $1 billion on Covid-19 testing in the full year 2020.

“We’re not sure how far we will get in the relevant timeframe, but we think it’s worth trying, and we stand ready to share anything we learn,” Amazon said about its testing plans.

Olsavsky said on the earnings call, “We’ve invested more than $600 million in COVID-related costs in Q1 and expect these costs could grow to $4 billion or more in Q2. These include productivity headwinds in our facilities as we provide for social distancing and allow for the ramp up of new employees, investments in personal protective equipment for employees, enhanced cleaning of our facilities, higher wages for our hourly teams, and hundreds of millions of dollars to develop COVID-19 testing capabilities. In Q1, we also had another $400 million of costs related to increased reserves for doubtful accounts.”

Disclaimer: We have no position in Amazon.com, Inc. (NASDAQ: AMZN) and have not been compensated for this article.