Amazon doubles profit in Q2; spends more than $4B on COVID-19
Amazon had a wildly successful second quarter of fiscal 2020 and kept a promise to spend billions of dollars on COVID-19 remediation.
The e-tail giant reported net income of $5.2 billion, up 100% from $2.6 billion the second quarter of fiscal 2019. Net sales increased 40% to $88.9 billion, compared with $63.4 billion in second-quarter 2019. Excluding a $582 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 41% compared with second quarter 2019. Online grocery sales tripled in the second quarter when compared with the same period the prior year.
Net sales in Amazon’s profitable Amazon Web Services (AWS) cloud computing division rose 28% to $10.8 billion from $8.4 billion.
Amazon also spent more than $4 billion on a variety of initiatives to assist employees in dealing with COVID-19 and ensure packages continued to reach customers in as timely a manner as possible. These included a one-time “Thank You” bonus totaling over $500 million to all frontline employees and delivery contractors who were with the company throughout the month of June, a new family backup care benefit through Care.com to 650,000 full and part-time Amazon and Whole Foods Market employees in the U.S., technology to help regulate social distancing in warehouses, and donations of PPE, meal deliveries, and money for social justice organizations.
In addition, Amazon increased grocery delivery capacity by over 160% and tripled grocery pickup locations to support heightened customer demand during COVID-19.
“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” said Jeff Bezos, Amazon founder and CEO. “We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales. Lastly, even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9 billion in capital projects, including fulfillment, transportation, and AWS.”
Providing financial guidance for Q3 2020, Amazon expects net sales between $87 billion and $93 billion, or to grow between 24% and 33% compared with Q3 2019. This guidance anticipates an unfavorable impact of approximately 2% from foreign exchange rates. This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.