The world’s largest online retailer, Amazon, increased sales significantly in the second quarter, despite high inflation and fears of a recession. Revenues rose by seven percent year-on-year to $121.2 billion (€119.7 billion), as the US group announced on Thursday after the US stock market closed. Although operating income fell from $7.7 billion to $3.3 billion, it exceeded expert expectations.
While the pandemic-fueled online shopping boom has come to an end, Amazon’s subscription services have boosted revenue by 10 percent to $8.7 billion. Despite price increases – see video – the group managed to attract new customers to its Prime service with free shipping and streaming services, which typically spend significantly more money on the e-commerce platform than other users.
Shares soared to 12 percent
The quarterly report was well received in the financial market. Shares rose more than 12 percent in premarket trading on Friday. Investors were very pleased with the business outlook for the current quarter. Amazon forecast revenue growth of up to 17 percent to $125 billion to $130 billion. Analysts had expected an average of $127 billion.
Overall, Amazon posted a net loss of $2.0 billion for the three months ended June. However, the reason was that a stake in the electric car maker Rivian was devalued by $3.9 billion. The company has come under heavy pressure in the stock market in the overall downtrend in technology stocks, and Amazon had already caused a $7.6 billion markdown on its balance sheet and red numbers in the previous quarter.
Spending grows slower than feared
Despite ongoing inflationary pressures in gas, energy and transportation, Amazon is making progress in controlling costs, CEO Andy Jassy said. In particular, productivity in the warehouse and delivery network has improved. Ultimately, operating expenses increased about 12 percent to $117.9 billion year-on-year. While the increase was greater than revenue, it was lower than feared by financial experts.
The cloud storage and web-based applications business, which is hugely important to Amazon because of its high profit margins, continued to thrive. Flagship Amazon Web Services increased revenue by nearly a third to $19.7 billion. Operating income rose about 36 percent to $5.7 billion. Amazon’s increasingly important online advertising company increased revenue by 18 percent to $8.8 billion.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
