This post was originally published on this site
Amazon.com Inc. Chief Executive Jeff Bezos promised to spend all the additional profits his company made from a huge boost in sales related to the COVID-19 pandemic, but sales grew so fast that he ended up with record earnings instead.
Amazon AMZN, +0.60% reported second-quarter profit of $5.2 billion, or $10.30 a share, Thursday afternoon, nearly doubling from $5.22 a share a year ago to a fresh quarterly record amid a huge boost in revenue. Amazon reported sales of $88.9 billion, up 40% from $63.4 billion a year prior and well ahead of Amazon’s prediction of $75 billion to $81 billion. Analysts on average had predicted earnings of $1.48 a share on sales of $81.45 billion.
Three months ago, Bezos said that he expected to spend billions in fresh operating profit that is flooding in as Americans sheltered-in-place due to the coronavirus purchase more goods online and businesses spend more on cloud computing to support workers stuck at home. “If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Bezos said in May.
Shareholders did not run away, however. Amazon’s stock has instead continued to run to record highs, gaining more than 24% in the past three months and pushing the company’s market capitalization higher than $1.5 trillion. Shares increased more than 4% in after-hours trading Thursday immediately following the release of the results.
“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Bezos said in Thursday’s announcement. “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand — purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners.”
The gains in Amazon’s core business show why investors are sticking by Amazon, and more are joining them. The company said that its e-commerce business grew 47.8% from last year in the second quarter to revenue of $45.9 billion from $31.05 billion, while analysts were expecting $39.89 billion. In North America, net sales online and at physical Amazon stores such as its Whole Foods Markets chains grew to $55.44 billion from $38.65 billion a year ago, while sales overseas grew to $22.67 billion from $16.37 billion.
Amazon Web Services, the company’s cloud-computing arm, saw revenue jump to $10.8 billion from $8.38 billion, while analysts on average were expecting $11 billion. As usual, AWS was the biggest profit driver for Amazon, delivering operating profit of $3.36 billion while Amazon reported overall operating income of $5.84 billion.
Even before the pandemic, Amazon had been spending on ramping up its logistics operations to handle faster shipping for customers of its Prime subscription service, and COVID-19 has pushed that spending streak into hyperdrive. Amazon has now passed 1 million employees, Bezos revealed in planned testimony for a Wednesday antitrust hearing in front of a congressional subcommittee, though because many are still listed as temporary, Amazon reported the number as 876,800 Thursday.
Amazon said it expects revenue to be between $87 billion and $893 billion in the current quarter, and learned from its previous guidance to expect profit, forecasting operating income of $2 billion to $5 billion even as it accounts for $2 billion in costs related to COVID-19.
