Stephanie Condon
for Between the Lines
| July 29, 2021 — 20:23 GMT (21:23 BST)
| Topic: Cloud
Amazon published its second quarter financial report on Thursday, missing revenue expectations for the quarter and sending shares down in after-hours trading. Amazon Web Services, however, saw its growth rate accelerate.
Overall, Amazon’s net income increased to $7.8 billion in the second quarter, or $15.12 per diluted share, compared with $5.2 billion, or $10.30 per diluted share, in second quarter 2020. Net sales increased 27 percent to $113.1 billion in the second quarter, compared with $88.9 billion in second quarter 2020.
Analysts were expecting earnings of $12.22 on revenue of $115.07 billion.
Amazon’s revenue fell below market expectations — falling at the mid-point of its own guidance for Q2, rather than the higher end — in part because of the “increase in mobility” among consumers during the quarter, CFO Brian Olsavsky said on a conference call Thursday.
“If you look back the last few quarters, we’ve not done a great job of nailing the impact of Covid. We’ve generally over-performed our guidance range,” he said.
As the spread of the pandemic slowed in the US over Q2, people were “getting vaccinated and getting out in the world,” he continued, “and not only shopping offline but also living life… it takes away from shopping time. It’s a good phenomenon — it’s great. We just have to appropriately gauge our run rate going forward.”
The quarterly report marked the first published since Andy Jassy stepped up earlier this month as CEO, replacing Amazon founder Jeff Bezos. The quarter included Amazon Prime Day, the annual sale, which this year surpassed every other Prime Day event in terms of sales volume.
“Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE, food, and other products that helped communities around the world cope with the difficult circumstances of the pandemic,” Jassy said in a statement. “At the same time, AWS has helped so many businesses and governments maintain business continuity, and we’ve seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud.”
Amazon
Breaking down sales by segment, AWS brought in $14.81 billion in net sales in Q2. Its 37 percent growth rate is better than Q1’s 32 percent growth rate and above the 29 percent growth rate posted in Q2 2020.
AWS growth accelerated across a broad range of customers, Olsavsky said on Thursday’s call.
“We see strong growth in enterprises, governments, educational and research institutions, and our startup and digital native customers,” he said.
Amazon’s North America segment brought in net sales of $67.55 billion, growing at 22 percent year-over-year. International net sales accounted for $30.72 billion, growing at 36 percent.
AWS once again accounted for a significant portion of operating income, bringing in $4.19 billion in Q2. By comparison, Q2 North America operating income was $3.15 billion, while the International segment brought in $362 million.
Advertising services is the primary driver of sales in Amazon’s “Other” category, which is not an official business segment. Amazon said the category grew 87 percent in the second quarter to bring in $7.91 billion in net sales.
For the third quarter, Amazon expects net sales between $106 billion and $112 billion. It expects operating income to come in between between $2.5 billion and $6 billion.
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Stephanie Condon
for Between the Lines
| July 29, 2021 — 20:23 GMT (21:23 BST)
| Topic: Cloud