The high inflation and the end of the online shopping boom in the pandemic are causing problems for Amazon. But the online giant remains on course for growth.
The world’s largest online retailer, Amazon, significantly increased sales in the second quarter despite high inflation and fears of a recession.
Revenues increased year-on-year by 7 percent to $121.2 billion (119 billion euros), as the group announced on Thursday after the US stock market closed. Although operating profit fell from $7.7 billion to $3.3 billion, it exceeded experts’ expectations.
Even though the online shopping boom fueled by the pandemic has come to an end, Amazon’s subscription services increased sales by 10 percent to $8.7 billion. Despite price hikes, the group managed to attract new customers to its Prime service with free shipping and streaming services, who typically spend significantly more money on the e-commerce platform than other users.
The quarterly report was well received on the financial market, with the share temporarily rising by more than 12 percent in the after-hours trading. Investors were particularly pleased with the business outlook for the current quarter. Amazon forecast sales growth of up to 17 percent to $125 billion to $130 billion. Analysts had expected an average of $127 billion.
economic concerns
Bottom line, Amazon posted a net loss of $2.0 billion for the three months ended June. The reason, however, was that a stake in the electric car manufacturer Rivian was devalued by $3.9 billion. The company has come under heavy pressure on the stock market in the general downtrend in tech stocks and had already caused Amazon a $7.6 billion balance sheet write-down and red figures in the previous quarter.
Despite persistent 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 been improved. Ultimately, operating expenses climbed by around 12 percent to $ 117.9 billion compared to the previous year. Although the increase was higher than in sales, it was lower than feared by financial experts.
The cloud business with storage space and applications on the Internet, which is extremely important for Amazon because of its high profit margins, continued to thrive. The flagship Amazon Web Services increased revenue by almost a third to $19.7 billion. The cloud platform’s operating profit increased by around 36 percent to $5.7 billion. Amazon’s increasingly important online advertising business increased revenues by 18 percent to $8.8 billion.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
