Amazon shares fell more than 7% in extended trading on Thursday after the company reported its first loss of revenue in three years and gave a weak guidance for the third quarter.
Here’s how the company did it:
- Profits: $ 15.12 vs $ 12.30 per share, according to analysts surveyed by Refinitiv
- Income: $ 113.08 billion vs. $ 115.2 billion, according to analysts surveyed by Refinitiv
Amazon’s revenue grew 27% year-over-year to $ 113.08 billion. That’s a significant slowdown from the second quarter of 2020, when sales soared 41% year-over-year.
In a call with reporters, Amazon CFO Brian Olsavsky blamed harsh year-over-year comparisons with his business during the Covid-19 lockdowns. In mid-May last year, Amazon saw growth rates rise between 35% and 45%, he said.
“We’re starting to get over that and that’s why you see some of the growth rate is slowing down,” Olsavsky said, adding that Amazon expects to see slower growth over the next few quarters.
For the third quarter, Amazon said it expects to post sales between $ 106 billion and $ 112 billion, representing growth of 10% to 16% compared to the same period last year. That’s well below the consensus estimates of $ 119.2 billion.
“Our clients are safe and healthy and they order us. And we know that there will be more vacations or more mobility. They will be things that probably people avoided last year and that is very good, ”Olsavsky said in the Call with reporters. “But it tends to lead them to do other things besides shopping. So we are only adjusting our execution rates in the, in the period in which we see that happening. “
The guide echoes similar warnings from Facebook and Apple, who said in quarterly earnings earlier this week that revenue growth rates would slow from pandemic highs.
Amazon said its operating profit in the third quarter will be in the range of $ 2.5 billion and $ 6 billion, a remarkably wide gap. That’s still a step down from the $ 6.2 billion in costs it incurred for things like coronavirus security measures in the third quarter of 2020.
Olsavsky said in an investor call that Amazon is in the midst of a multi-year investment cycle, which includes large expenditures to increase storage capacity across the country. Most of Amazon’s building openings and spending in 2021 are scheduled 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 over the CEO role to Andy Jassy, who previously led AWS. Bezos is now CEO. Like Bezos, who has not participated in an earnings call since 2009, Jassy was absent from the Thursday night conference call.
In a statement, Jassy thanked Amazon employees for their work during the coronavirus pandemic, adding, “I am very excited to be working with you as we invent and build for the future.”
While Amazon’s second-quarter sales disappointed, earnings beat expectations, helped by its highly profitable cloud computing, subscriptions and advertising businesses. Amazon’s “other” unit, which includes advertising and other services, increased revenue 87% year-on-year during the period.
Amazon Web Services increased its revenue 37% in the second quarter, faster than the growth of 32% in the previous quarter. AWS revenue totaled $ 14.81 billion in the quarter, topping the $ 14.20 billion estimated by analysts.
Amazon’s workforce continues to grow. At the end of the third quarter, Amazon employed 1.33 million people worldwide, up 52% year-over-year.
An increase in cases of Covid-19 delta variants has pushed some Silicon Valley companies, including Facebook, Google, Uber and Twitter, to reconsider their plans to go back to the office and require vaccinations for employees or close offices again. Olsavsky told reporters that Amazon has not adjusted its plans for employees to return in September. The company will not require that employees be vaccinated, he said.
CLOCK: Amazon shares are on the brink of a comeback, says Jim Cramer
