Amazon dodged a coronavirus bullet in its second quarter, posting big gains in sales and operating income as shoppers around the world stayed home and did the bulk of their shopping online.
The online retail giant, which operates the Amazon Music streaming platform and is one of a small handful of tech companies in the “trillion-dollar club”, reported net sales of $88.9 billion in the quarter ending June 30, 2020, beating analysts’ expectations with a whopping 40 per cent improvement on the same period last year.
Also during the period, operating income almost doubled to $5.8 billion, up from $3.1 billion in second quarter of the previous year.
Revenue from subscription services ballooned to $6 billion, well advanced from the $4.6 billion reported in the corresponding period in 2019.
“This was another highly unusual quarter,” said Jeff Bezos, Amazon founder and CEO in a statement issued to investors, “and I couldn’t be more proud of and grateful to our employees around the globe.”
Amazon, Bezos pointed out, spent over $4 billion on incremental COVID-19-related costs in the quarter to “help keep employees safe and deliver products” during the pandemic, a sum that was expected to soak-up its profits.
These outlays included purchasing personal protective equipment for its workforce, and forking-out $500 million in “thank-you” bonus payments to frontline workers and partners, Amazon chief financial officer Brian Olsavsky explained during an earnings call.
Amazon’s Prime members are “shopping more often” and with “larger basket sizes,” Olsavsky noted.
If the results were strong and steady, the same can’t be said of the performance of Bezos who, along with the CEOs of Apple, Facebook and Google parent Alphabet, was grilled earlier this week by lawmakers on Capitol Hill.
According to The Hollywood Reporter’s coverage of the House of Representatives antitrust subcommittee, Bezos’ testimony came across as defensive when he was pushed on reports that Amazon had used data from third party sellers in its marketplace to launch competing products. And he downright struggled to respond to other probing questions.
Looking ahead, Amazon is forecasting third quarter net sales in the region of $87 billion to $93 billion, though its “results are inherently unpredictable” due to the nature of the pandemic and myriad issues affecting the retail space.
Operating income is expected to be between $2-5 billion for the next quarter.