Amazon Posts Net Loss for the Second Straight Quarter

Amazon.com Inc. reported slowing sales and a net loss for the second straight quarter, as strength in the tech giant’s cloud-computing business was outweighed by continued weakness in core retail operations suffering from the aftereffects of a pandemic boom, reports The Wall Street Journal.

Revenue for the tech giant in the latest period increased by 7.2% from a year earlier to $121.2 billion. That was a hair slower than the 7.3% rise in the first quarter, which had marked Amazon’s slowest growth in about two decades.

Amazon’s loss totaled $2 billion in the quarter, compared with a profit of $7.8 billion a year ago. The loss came partly because of the company’s stake in electric-vehicle maker Rivian Automotive Inc., whose valuation has plunged this year, causing Amazon to book a pretax loss of $3.9 billion in the second quarter. Amazon’s North America division, which houses its core online retail business in its biggest market, reported a third consecutive operating loss, though it narrowed from the prior quarter.

Amazon’s net loss defied expectations for a moderate profit in the period, but its revenue grew faster than analysts anticipated, helped in part by the continued strength in cloud-computing and the services it provides to other vendors that sell on its site. Shares were up more than 13% in after-hours trading, hitting their highest point in about three months—though still down sharply from the start of 2022.

Amazon and other tech giants that thrived through the pandemic—as more life and work shifted online—have consistently reported slowing growth in recent days, though in some cases not as much as investors had feared. Inflation is pushing up costs and crimping consumer spending power, and global uncertainty around issues running from Russia’s war on Ukraine to the persistence of Covid-19 has made individuals and businesses more cautious.

Amazon executives said that surging inflation is among its biggest challenges now but that the company has been able to pare costs anyway to help deal with its shifting circumstances.

Like other companies, Amazon is rethinking its hiring due to inflation and the economic environment, Brian Olsavsky, Amazon’s chief financial officer, said on a call with reporters after the quarterly report. “I don’t think you’ll see us hiring at the same pace we did in the last year or the last few years,” he said, but added that the company is still committed to hiring engineering positions, and in its cloud-computing and advertising divisions.

The cloud-computing and advertising businesses have been reliable growth engines for Amazon. Revenue for Amazon Web Services, the largest cloud-computing company by market share, grew 33% to $19.7 billion in the second quarter

Amazon’s advertising business, for which the company recently began breaking out financial data, grew 18% to $8.8 billion in the quarter.