The retailer exceeded analysts’ earnings expectations for the second quarter but missed on sales. Amazon reported sales growth of 27% year over year, to $113.08 billion. Compared to the second quarter of 2020, that’s a significant decrease in growth, when sales rose around 40%.
“Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including personal protective equipment, food and other products that helped communities around the world cope with the difficult circumstances of the pandemic,” Amazon CEO Andy Jassy said in a statement. “At the same time, AWS [Amazon Web Services] has helped so many businesses and governments maintain business continuity, and we’ve seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud.”
Amazon executives pointed to the volatility over the last 18 months from the COVID-19 pandemic for the fluctuations in its sales.
“We do expect this pattern of difficult year-over-year revenue comps to continue for the next few quarters,” Brian Olsavsky, Amazon’s chief financial officer, said during the company’s quarterly earnings call. “As we move forward and start to comp COVID's impact on our revenue growth, we encourage you to also look at the multiyear compounded annual growth rate since the onset of the pandemic to better put this growth in perspective.”
Olsavsky also noted Amazon has added 50 million new Prime members over the last 18 months.
Amazon projected its net sales for the third quarter of 2021 are also likely to exceed $100 billion, with an expectation of $106 billion to $112 billion, for a 10% to 16% growth rate for the quarter. Operating income is expected to be between $2.5 billion and $6.0 billion, compared with $6.2 billion in third quarter 2020. That guidance includes roughly $1.0 billion of costs related to the pandemic.
While the second quarter ended in June, Amazon has already had a big month in July as longtime CEO and Founder Jeff Bezos stepped down from his role July 5. He has moved into the role of executive chairman, while Andy Jassy, formerly CEO of Amazon Web Services, has taken the helm. Just weeks later, Bezos launched himself into space on the first manned flight from his spaceflight services company Blue Origin.
Amazon also made a huge acquisition during the quarter when it purchased MGM studios for $8.5 billion. MGM owns a catalog of more than 4,000 movies, making the move a huge snag for Amazon as it continues to build out Prime video.