AWS, net sales and Amazon Prime hold Amazon’s Q2 (closely), although Q3 forecasts are very positive

Twitterlinkedin

Amazon has released its Q2 results. The company founded by Jeff Bezos lost 5,879 million dollars in the first 6 months of 2022. Even reducing its operating profit, net sales have boosted its income, which has exceeded expectations, reaching 121,230 million dollars compared to the estimated 119,090 initially. These revenues were somewhat lower than those of the first quarter (-3,655 million euros), but the good forecasts have meant that its shares have soared nearly 13% with the market already closed.

Amazon’s Q2 2022 results surprise investors and analysts

According to what was communicated to the media and investors, between January and June 2022 Amazon has had some loss of 20 cents per share compared to the 13 cents per share that analysts expected, a drop after having registered net profits of 15,885 million in the same period of 2021. And despite this, expectations and the investment market have received the figures as news positive. Why’s that?

The accounts include a loss of 3,900 million from Amazon’s investment in Rivian Automotive, a manufacturer of electric cars in which it has an 18% stake, which it has not been able to compensate with the rest of its businesses, since, without counting this operation, the firm would have achieved a profit of 1,900 million dollars. This is the main reason why the market has not taken losses negatively.

“Despite continued inflationary pressures in fuel, power and transportation costs, we are making progress towards the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” he said. Andy Jessycurrent CEO of Amazon.

One piece of information that investors especially liked was revenue, that is, net sales, which increased by 7%, exceeding analyst expectations.

Good expectations for Amazon Prime and for Amazon Web Services

Apart from that, from the direction of the technological giant, they are waiting to see how “revenues for Prime accelerate” after the announcement that the brand will raise the prices of this service in certain markets, among which is Spain.

In that sense, it is assumed that revenues could grow even more next semester since, according to Andy Jassy, ​​”revenue growth accelerates as we turn Prime subscriptions into something better for members, investing in improving service times. delivery and adding unique benefits such as free Grubhub delivery for a year, exclusive access to the NFL, and the release of the highly anticipated series The Lord of the Rings: The Rings of Power in September.”

Of the key segments, Amazon Web Services (AWS) has positioned itself as one of the business branches that has presented the most growth, representing 16% of the total both in the quarter and in the accumulated: its income grew by 33% year-on-year in Q up to 19,739 million dollars (about 19,300 million in euros).

In addition, AWS has achieved in the quarter an operating profit of 5,715 million (5,600 million euros), which represents a growth of 36% compared to the same period of the previous year. In fact, if we look at historical figures, its cloud services platform (AWS) generates much higher margins than its e-commerce business, which is why it has become the company’s great bet for the future and its more profitable business.

Amazon forecasts improve for the rest of 2022

For the third quarter, Amazon projects sales of between 125 billion and 130 billion dollars; what it would mean grow between 13% and 17% compared to the same third quarter of 2021.

The company has also forecast operating income for the quarter of between zero and 3.5 billion dollars, with which they hope to achieve black numbers. Amazon Chief Financial Officer Brian Olsavsky said on a call with analysts that the revenue forecast includes nearly four percentage points of drag from currency headwinds.

Olsavsky said on the same call that capital investment in 2022 would be slightly higher than the $60 billion the company spent last year, but in slightly different proportions. He said technology infrastructure spending would be just over half of total spending this year, up from 40% last year. In addition, Olsavsky also said that the company expects continued inflationary pressures in the third quarter due to higher fuel, electricity and shipping costs.

Given the best of scenarios, Amazon would reach the ninth month of the year still in negative.

Image: Depositphotos

Stay informed of the most relevant news on our Telegram channel