High inflation and the end of the online shopping boom during the pandemic are causing problems for Amazon. But the internet giant remains on track to grow.
The world’s largest online retailer, Amazon, increased sales significantly in the second quarter despite high inflation and fears of a recession.
Revenues rose 7 percent year-on-year to $ 121.2 billion (€ 119 billion), the group announced on Thursday after the US stock market closed. While operating profit fell from $ 7.7 billion to $ 3.3 billion, it exceeded experts’ expectations.
Even though the pandemic-driven online shopping boom is over, Amazon’s subscription services boosted sales by 10 percent to $ 8.7 billion. Despite the price increases, 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, and the share in after-hours trading temporarily increased by over 12%. Investors were particularly pleased with the business outlook for the current quarter. Amazon forecasts sales growth of up to 17 percent, from $ 125 billion to $ 130 billion. Analysts expected an average of $ 127 billion.
Overall, Amazon reported a net loss of $ 2.0 billion for the three months ended June. The reason, however, was the devaluation of the stake in Rivian, the electric car manufacturer, by $ 3.9 billion. The company came under intense pressure in the stock market amid an overall decline in tech stock prices, and already in the previous quarter saw Amazon posted $ 7.6 billion in balance sheet write-offs and red figures.
Despite continued inflationary pressures in the gas, energy and transportation sectors, Amazon is making strides in controlling costs, said CEO Andy Jassy. In particular, the efficiency in the warehouse and delivery network has been improved. Ultimately, operating expenses rose by approximately 12 percent to $ 117.9 billion from the previous year. While growth was higher than sales, it was lower than what financial experts feared.
The cloud business with disk space and web applications, which is extremely important to Amazon due to its high profit margins, continued to grow. The flagship Amazon Web Services increased revenues by almost a third to $ 19.7 billion. The operating profit of the cloud platform increased by approximately 36 percent to $ 5.7 billion. Amazon’s increasingly important online advertising business grew revenue by 18 percent to $ 8.8 billion. (dpa)