Amazon Q2 income doubles, but revenue misses
Amazon reported a mixed second quarter as its profit doubled and beat expectations but revenue fell short.
The company's disappointing sales came as consumers continue to remain cautious with their spending and seek out bargains. On a call with reporters, Amazon finance head Brian Olsavsky said that consumers were trading down and buyer cheaper products, leading to lower average selling price.
Among the quarter's highlights was a strong showing by Amazon’s AWS cloud-computing unit, whose sales increased a better-than-expected 19% year-over-year to $26.3 billion. AWS segment operating income was $9.3 billion, compared with operating income of $5.4 billion in second quarter 2023.
“We’re continuing to make progress on a number of dimensions, but perhaps none more so than the continued re-acceleration in AWS growth,” stated Amazon CEO Andy Jassy. "As companies continue to modernize their infrastructure and move to the cloud, while also leveraging new Generative AI opportunities, AWS continues to be customers’ top choice as we have much broader functionality, superior security and operational performance, a larger partner ecosystem, and AI capabilities."
In comments about AWS on the earnings call, Jassy said "we have a lot of demand right now, and I think it’s going to be a very, very large business for us.”
Amazon's net income increased to $13.5 billion, or $1.26 per share, in the quarter ended June 30, compared with $6.7 billion, or $0.65 per diluted share, in the year-ago period. Analysts had expected earnings per share of $1.03. The increase came amid cost-cutting across the company.
Operating income increased to $14.7 billion in the second quarter, compared with $7.7 billion in second quarter 2023.
Net sales increased 10% to $148.0 billion, missing estimates of $148.56 billion. North America segment sales increased 9% year-over-year to $90.0 billion. International segment sales increased 7% year-over-year to $31.7 billion, or increased 10% excluding changes in foreign exchange rates.
Sales in Amazon's online stores segment rose 5%. Revenue from third-party seller services, which includes commissions, and fulfillment and shipping fees, increased 12%. Advertising revenue jumped 20% to $12.77 billion.
Amazon expects revenue of $154.0 billion to $158.5 billion for the third quarter, compared with analysts' average estimate of $158.24 billion. It expects operating income of $11.5 billion to $15 billion, compared with $11.2 billion in the year-ago period. Analysts has forecast third-quarter operating income of $15.3 billion.
