Amazon’s revenue continued to climb this year in the second quarter, but not quite at the rate analysts expected. This could be because shoppers are finally moving out of their homes.
Thursday’s announcement by the tech and e-commerce giant showed that net sales for the April-June quarter rose 27% to $113.1 Billion, an increase of 27% over the $88.9 Billion in the same period last years. Although it missed analysts’ estimates of approximately $115 billion in sales, the net sales were comfortably within the $110 billion-$116 billion range that Amazon had predicted for its second quarter. Earnings per share rose 46.8% to $15.12 from $10.30 last year. According to an analyst survey by Yahoo Finance, this beat the $12.22 earnings per share forecasts.
According to Brian Olsavsky (Amazon’s chief financial officer), as economies open up and COVID restrictions decrease, people might be focusing on other activities and spreading their dollars around as they experience “additional movement.” Amazon’s revenue for the last quarter of 2020 was more than $100 billion. And Thursday’s results follow booming sales in the first quarter of 2021, when retailers normally expect to see a slump in sales after the holidays.
In April, Amazon said it would move its annual Prime Day shopping holiday to the second quarter, altering the event’s usual timing of July. Prime Day was eventually scheduled for June 21-22, the earliest it’s been held. Amazon claimed Thursday that the event was most successful because third-party sellers used the Amazon marketplace to sell their products. This program, Fulfilled by Amazon, allows companies to store their goods in Amazon’s warehouses, use its delivery service, and participate in Prime (sellers can also use other fulfillment firms to participate in Prime). Amazon’s revenue grew faster from services than its retail sales.
Advertising revenues also increased significantly. Olsavsky stated that sellers were paying higher for advertising slots, and that customers were clicking more on ads. This service allows small businesses to rank higher in search results for keywords that are related to their products. Customers can also search for the name of a bigger competitor. Amazon Web Services, Amazon’s main profit generator, was strong, generating $14.8 billion in revenue, accounting for over half of Amazon’s operating income.
In the same quarter last year, Amazon blasted past analysts’ predictions, posting record profits even after telling investors it would spend billions to deal with the effects of COVID-19. Amazon had to deal with significant obstacles in its logistics chain, which caused delays in delivery, and faced high turnover at warehouses where workers protested Amazon’s safety handling.