Content Guy's Note: Yes, I know I told you I was going to take an extended weekend. But Amazon's quarterly earnings just came out, and I didn't want to wait until Tuesday to report them. So, I'm back. Briefly.
Amazon this afternoon said that its Q2 net sales increased 11% to $134.4 billion, compared to $121.2 billion during the same period a year ago. Net income for the second quarter was $6.7 billion, compared with a net loss of $2.0 billion a year ago.
The company said that North America segment sales increased 11% year-over-year to $82.5 billion," while international sales increased 10% year-over-year to $29.7 billion, and Amazon Web Services (AWS) sales increased 12% year-over-year to $22.1 billion.
CNBC notes that "advertising continues to be a booming business for Amazon, with quarterly revenue jumping 22% in the period to $10.7 billion. Google’s ad revenue rose just 3.2% in the second quarter and Facebook’s rose 12%."
In a prepared statement, CEO Andy Jassy said, “It was another strong quarter of progress for Amazon. We continued lowering our cost to serve in our fulfillment network, while also providing Prime customers with the fastest delivery speeds we’ve ever recorded. Our AWS growth stabilized as customers started shifting from cost optimization to new workload deployment, and AWS has continued to add to its meaningful leadership position in the cloud with a slew of generative AI releases that make it much easier and more cost-effective for companies to train and run models … We’re also continuing to see strong demand for our advertising services as the team keeps innovating for brands, including the ramp up for Thursday Night Football with the ability for advertisers to tailor their spots by audience and create interactive experiences for consumers."
CNBC points out that "it was Amazon’s biggest earnings beat since its report for the fourth-quarter of 2020 … Amazon has returned to double-digit growth after expansion was mired in the single digits for five of the past six quarters."
The Wall Street Journal writes that "As with other tech giants, Amazon’s business has been whipsawed in recent years as sales boomed during the pandemic, when much of work and life shifted online, then slowed afterward as more normal patterns of shopping and business spending resumed. In the spring of last year, Amazon was still adjusting to that newer reality, which led to a $2 billion loss for the second quarter of 2022."
And the New York Times writes:
"What has some analysts worried is that Amazon’s newfound desire to keep expenses down clashes with its longstanding obsession over making customers happy.
"Tom Forte, an analyst with D.A. Davidson, wrote a note last week to investors about several disappointments he had experienced with Amazon, including no longer being able to have a defective product picked up for free by UPS. Now, he wrote, there is a $7.99 fee. 'In our view, Amazon is playing a ‘game of chicken’ and banking on other e-commerce companies not to offer a superior service, instead of its historical approach of working backwards with a customer-obsessed approach,' Mr. Forte wrote."
- KC's View:
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This last observation is an interesting one, and I think it dovetails with some observations that Amazon may have entered a Today-Is-Day-Two mindset. Jassy, I suspect, has to figure out how to a) make sure company employees continue to think that Today is Day One, b) communicate effectively to the investor class that it can simultaneously innovate and watch its pennies, and c) deliver on the company's values and value proposition.
I have one additional thought, if I may. The increased advertising revenue is seen as a good thing, a new and improved revenue stream having a positive impact on the bottom line. But I worry that this can be taken too far - Amazon's pages are so filled with ad messages that bit diminishes the customer experience. Not enough for me to shop elsewhere. Yet. But I think that the temptation to squeeze as much money out of the advertising community may be too great to resist, and the long-term effect on shoppers could be negative.
