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Amazon's coronavirus symptoms: Swelling of the profit, large sales deposits, insatiable demand

When the economy's tanking, who ya gonna call? Jeff Bezos!

Amazon on Thursday reported $88.9bn in revenue for its second quarter of 2020, a 40 per cent increase year-on-year that exceeded expectations and lifted the web goliath's already buoyant stock in after-hours trading.

Analysts, on average, anticipated a figure more like $81.53bn, a sign that they failed to appreciate the online store's prospects at a time when so many people are working from or otherwise stuck at home. They were even further off with EPS estimates, which averaged $1.46 and came in at $10.30.

This at a time when the US economy contracted 33 per cent.

"This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” said Jeff Bezos, Amazon founder and CEO, in a statement.

Bezos, the world's richest man, on Wednesday defended his corporation at a congressional antitrust hearing. In his statement, he cited the challenge of income inequality.

Amazon managed its earnings bonanza despite spending more than $4bn during the second quarter on COVID-19-related initiatives to keep employees and suppliers safe. The biz expects to spend about half as much on similar efforts in Q3.

Amazon's relevant metrics for the three months to June 30 include:

  • Net sales $88.9bn, up 40 per cent from $63.4bn in Q2 2019.
  • Operating income $5.8bn, up 87 per cent from $3.1bn in Q2 2019.
  • Net income $5.2bn, up 100 per cent from $2.6bn in Q2 2019.
  • Diluted EPS $10.30, up from $5.22 in Q2 2019.
  • AWS revenue reached $10.8bn, up 29 per cent from $8.3bn in Q2 2019.

On Amazon's conference call for investors, CFO Brian Olsavsky said the internet titan saw increased demand for groceries and consumer goods in March and that expanded into other categories in subsequent months.

He attributed Amazon's earnings success to "increased consumer demand, led by Prime Members."

Olsavsky said that companies want to trim their expenses and that AWS salespeople are helping customers as they try to find ways to reduce their cloud spending.

Billing at AWS, as with other cloud providers, can get out of hand because cloud service usage isn't always obvious to, or anticipated by, those renting computing infrastructure. ®

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