Amazon Reports Mixed Q2 Earnings

Amazon.com, Inc. has announced financial results for its second quarter ended June 30, 2021.

• Operating cash flow increased 16% to $59.3 billion for the trailing twelve months, compared with $51.2 billion for the trailing twelve months ended June 30, 2020.
• Net sales increased 27% to $113.1 billion in the second quarter, compared with $88.9 billion in second quarter 2020. Excluding the $2.5 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 24% compared with second quarter 2020.
• Operating income increased to $7.7 billion in the second quarter, compared with $5.8 billion in second quarter 2020.
• Net income increased to $7.8 billion in the second quarter, or $15.12 per diluted share, compared with $5.2 billion, or $10.30 per diluted share, in second quarter 2020.

According to The Wall Street Journal, Amazon. com Inc. reported strong financial results that showcased its dominance even as a slight slowdown in e-commerce sales highlighted the challenge of sustaining the unfettered growth it has logged during the pandemic.

The Seattle-based tech giant took home almost $30 billion in profit in the past year as millions of consumers moved online to meet their shopping, entertainment and work needs, adding to its power. Amazon’s cloud-computing business picked up speed after a period of slower expansion, and its advertising business continued to grow rapidly.

But as with other large technology companies, investors have begun to question whether such momentum can be maintained. Amazon posted second-quarter sales of $113.1 billion, slightly less than the $115.4 billion predicted by analysts polled by FactSet. Profit was $7.8 billion, or $15.12 a share, exceeding analysts expectations of $12.28 a share.

Amazon finance chief Brian Olsavsky said Thursday he expects the step-down in sales results to continue as the economy opens more and sales stabilize from their outsize growth earlier in the pandemic.

Amazon’s online store sales, which had been growing at a high double-digit rate, eased to 16% year-over-year growth for the quarter. The decline came even as Amazon moved up the date of its annual Prime Day shopping event, which is usually held in the third quarter.

The April-to-June stretch marked Amazon’s last quarter under Jeff Bezos as chief executive; the company’s founder left the role on July 5 to become executive chairman. Andy Jassy —an Amazon lifer who headed its cloud-computing unit, Amazon Web Services—is expected to bring an ultra-detail-oriented management style to the company’s top position, The Wall Street Journal reported earlier this month.

Demand for computing power has long bolstered Amazon’s earnings. Such needs have grown during the pandemic, as more companies look to boost server capacity and software tools. Amazon Web Services, which offers such tools, generates a significant portion of Amazon’s operating income. Its sales, which had been slowing in recent quarters, picked back up to start the year. Sales for the cloud unit totaled $14.8 billion in the second quarter, a 37% increase from a year earlier.

Amazon has also become a dominant force in advertising behind Google and Facebook Inc. The company’s ad unit, which has been expanding at a high double-digit clip. grew 87% year-over-year in the second quarter.

Amazon’s trillion dollar valuation hasn’t stopped it from trying to add businesses to its empire, even as its power has received more scrutiny from policy makers. Amazon in May announced it had agreed to acquire the Hollywood studio MGM in a deal valued at $8.45 billion. The acquisition is being reviewed by the Federal Trade Commission.