E-commerce giant Amazon released its second quarter results today, and despite inflation and a net loss of $2 billion, the results were surprisingly better than expected. All the loss is attributed to Amazon’s stake in Rivian. The net loss in the second quarter is compared to net income of $7.8 billion in the second quarter of 2021.
Revenue rose 7% to $121.2 billion in the second quarter, compared to $113.1 billion in the same period in 2021. This beat Wall Street’s estimate of $119.3 billion. The company forecast revenue between $116 billion and $121 billion for the quarter.
Due to the slightly good news, Amazon shares were up 11% in late trading on Thursday.
It is important to note that online store sales fell 4.3% to $50.89 billion. Wall Street only estimated a decline of about 2%.
The company’s shares have fallen 32% so far, mainly due to the string of disappointing quarterly results. At the end of April, Amazon collapsed in the first quarter and reported a loss of $3.84 billion. Not only did the results fall short of Wall Street’s forecast, but the stock also fell 14% that day — the biggest one-day drop in 16 years.
“Despite continued inflationary pressures in fuel, energy and transportation costs, we are making progress on the more manageable costs we referenced last quarter, specifically improving the productivity of our fulfillment network,” said Andy Jassy, Amazon CEO , in the business results let go.
Analysts were cautious about today’s results as it is a difficult time for Amazon as the company faced a range of obstacles, including supply chain and employee disruptions, wage increases, inflation, higher fuel costs and the war in Ukraine.
Jassy added, “We’re also seeing sales grow as we make Prime even better for members, both by investing in faster shipping speeds and adding unique benefits like free Grubhub delivery for a year.”
Looking at other numbers, ad sales were higher this quarter, to $8.76 billion, up 4.3%. This is perfect with projections. The company’s advertising arm is critical and is expected to generate $8.7 billion in revenue, up 21% from the prior year.
Amazon Web Services (AWS), the company’s cloud computing unit, contributed $19.74 billion, up 33% from last year. AWS is an asset to the company, growing 37% in the first quarter. The future of Amazon’s cloud business is critical as the looming recession is likely to lead to a decline in corporate spending on cloud services.
The retail industry has seen some pretty bad news lately, with Walmart slashing its second-quarter and full-year guidelines and saying food inflation is limiting consumer spending on non-essential items. Shopify laid off 10% of its staff due to slowing sales growth.
Tech companies have also experienced it. Google parent Alphabet and Microsoft reported earnings this week that exceeded Wall Street expectations. Also, Facebook owner Meta reported its first year-over-year revenue decline.