Amazon beats expectations with strong sales and profit growth
Amazon, the e-commerce giant, reported its second-quarter earnings on Thursday, August 3, 2023, and surpassed analysts’ expectations with a 11% increase in sales and a sharp rise in profit. The company’s revenue reached $134.4 billion, up from $121.2 billion in the same quarter last year. The revenue figure exceeded the average estimate of $131.4 billion by Refinitiv analysts. The company’s net income was $6.7 billion, compared to a net loss of $2 billion in the second quarter of 2022. The earnings per share was $13.18, beating the forecast of $12.22 by Refinitiv analysts.
The company’s stock surged nearly 10% in after-hours trading, following the release of the earnings report. Amazon’s stock has risen 52% year to date, making it one of the best-performing tech stocks in the market.
Amazon attributes its success to fast delivery, Prime Day, and AWS
In a statement, Amazon’s CEO Andy Jassy attributed the company’s success to its fast delivery speeds, its Prime Day event in July, and its cloud computing segment, Amazon Web Services (AWS). He said that the company was able to lower its cost to serve in its fulfillment network, while also providing Prime customers with the fastest delivery speeds ever recorded. He also said that Prime members purchased more than 375 million items during the Prime Day event, which was held on July 10 and 11.
Jassy also highlighted the strong performance of AWS, which grew its sales by 12% to $14.8 billion, representing 11% of Amazon’s total revenue. He said that AWS launched several new products and features in the second quarter, such as AWS Proton, a fully managed application deployment service, and AWS Inferentia, a custom chip that accelerates machine learning inference workloads. He also said that AWS continued to win customers and expand its global footprint, with new regions planned in Australia, India, Indonesia, Spain, and Switzerland.
Jassy also mentioned the continued strong demand for Amazon’s advertising services, which grew its sales by 22% to $10.7 billion. He said that Amazon’s advertising platform helped businesses reach more customers and drive more sales across its online stores and other properties.
Amazon faces challenges from labor issues, antitrust probes, and competition
Despite its impressive results, Amazon also faces some challenges in the coming quarters. The company is dealing with labor issues, such as a unionization drive at its warehouse in Bessemer, Alabama, which was rejected by workers in April but is being challenged by the union on grounds of alleged interference by Amazon. The company is also facing antitrust probes from regulators in the US and Europe over its market dominance and business practices. The company is also facing competition from rivals such as Walmart, Target, Shopify, and Microsoft.
Amazon said that it expects its third-quarter sales to grow between 9% and 13% compared to the previous year’s quarter, which would be lower than the growth rate in the second quarter. The company also said that it expects its operating income to be between $2.5 billion and $6 billion in the third quarter, which would be lower than the $6.2 billion operating income in the second quarter.
