Amazon delivers third straight US$100b quarter n a rowFinance | 30 Jul 2021 6:47 am
Amazon shares fell by more than 7 percent in extended trading on Thursday after the company reported its first revenue miss in three years and gave weak third-quarter guidance, CNBC reports.
Here’s how the company did:
Earnings: US$15.12 vs US$12.30 per share, according to analysts surveyed by Refinitiv
Revenue: US$113.08 billion vs US$115.2 billion, according to analysts surveyed by Refinitiv
Amazon’s revenue grew by 27 percent year over year to US$113.08 billion. That’s a significant slowdown from the second quarter of 2020, when sales skyrocketed 41 percent year over year.
On a call with reporters, Amazon CFO Brian Olsavsky blamed tough year-over-year comparisons to its business during lockdowns. In mid-May of last year, Amazon saw growth rates jump to between 35 percent to 45 percent, he said.
“We’re starting to lap that and that’s why you see some of the growth rate coming down,” Olsavsky said, adding that Amazon expects to see slower growth continue for the next few quarters.
For the third quarter, Amazon said it expects to book sales between US$106 billion and US$112 billion, representing growth of 10 percent to 16 perent compared to the same period last year. That’s well below consensus estimates of US$119.2 billion.
“Our customers are safe and healthy and ordering from us. And we know that there’ll be more vacations or be more mobility. They’ll be things that probably people shied away from last year and that’s all good,” Olsavsky said on the call with reporters. “But it does tend to lead them to do other things besides shop. So we’re just adjusting our run rates in the, in the period that we see that happening.”
Amazon said its operating profit in the third quarter will be in the range of US$2.5 billion and US$6 billion, a notably wide gap. That’s still a step down from the US$6.2 billion of costs it incurred from things like coronavirus safety measures in the third quarter of 2020.
Olsavsky said in a call with investors that Amazon is in the midst of a multiyear investment cycle, which includes spending heavily to increase warehouse capacity across the country. Most of Amazon’s 2021 spend and building openings are planned for the second-half of the year, he added.
The June quarter reflects the last full quarter of Jeff Bezos’ tenure as CEO. On July 5, Bezos handed the role of CEO over to Andy Jassy, who previously led AWS. Bezos is now executive chairman. Like Bezos, who hasn’t participated in an earnings call since 2009, Jassy was absent from Thursday evening’s conference call.
In a statement, Jassy thanked Amazon employees for their work during the coronavirus pandemic, and added, “I am very excited to work with you as we invent and build for the future.”
While Amazon’s second-quarter sales disappointed, earnings trounced expectations, helped by its highly profitable cloud-computing, subscriptions and advertising businesses. Amazon’s “other” unit, which includes advertising and other services, grew revenue by 87 percent year over year during the period.
Amazon Web Services grew its revenue by 37 percent in the second quarter, faster than 32 percent growth in the previous quarter. AWS revenue came in at US$14.81 billion in the quarter, surpassing analysts’ estimated US$14.20 billion.
Amazon’s headcount continues to swell. At the end of the third quarter, Amazon employed 1.33 million people worldwide, up by 52 percent year over year.
A rise in the coronavirus delta variant cases has pushed some Silicon Valley companies, including Facebook, Google, Uber and Twitter, to rethink their return-to-office plans and mandate vaccinations for employees or close offices again. Olsavsky told reporters that Amazon hasn’t adjusted its plans to have employees return in September. The company will not require employees to be vaccinated, he said.