Why Amazon’s Q2 Is So Shocking

Amazon.com Inc. (NASDAQ: AMZN | AMZN Price Prediction) released second-quarter financial results after markets closed Thursday. The e-commerce empire said that it had $10.30 in earnings per share (EPS) and $88.91 billion in revenue, compared with consensus estimates that called for $1.46 in EPS and $81.53 billion in revenue. In the same period of last year, Amazon reported $5.22 in EPS and $63.4 billion in revenue.

During the most recent quarter, the company spent over $4 billion on incremental COVID-19-related costs to help keep employees safe and deliver products to customers. Management also noted that it is paying a “special thank you bonus” of over $500 million to front-line employees and delivery partners.

Since March, Amazon has created over 175,000 new jobs and is in the process of bringing 125,000 of these employees into regular, full-time positions.

Amazon Web Services (AWS) revenues increased 29.0% to $10.81 billion, up from $8.38 billion in the same period of last year, with operating income of $3.36 billion.

In its other segments Amazon reported:

• North American net sales increased 43.4% to $55.44 billion, with an operating income of $2.14 billion.
• International sales increased 38.5% to $22.67 billion, with operating income of $345 million.

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As for guidance, the company expects to see net sales in the range of $87.0 billion to $93.0 billion, with operating income in the range of $2.0 billion to $5.0 billion in the third quarter. The consensus estimates call for $4.37 in EPS on $86.29 billion in revenue for the quarter.

On the books, cash and cash equivalents totaled $27.51 billion at the end of the quarter, versus $23.51 billion at the end of the same period last year. Operating cash flow increased 42% to $51.2 billion for the trailing twelve months versus $36.0 billion in the same period last year. At the same time, free cash flow increased to $31.9 billion, compared with $25.0 billion.

Shares of Amazon closed Thursday at $3,051.88, in a 52-week range of $1,626.03 to $3,344.29. The consensus price target is $3,102.76. Following the announcement, the stock was up about 5% at $3,190.01 in the after-hours session.

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