Amazon Q2 profit plunges missing Wall Street’s expectations

8 years ago - Published in Finance, Fundamental Analysis

Amazon's second-quarter report fell well short of Wall Street's expectations. The company's earnings missed analysts' forecasts by more than a dollar a share. It also offered a disappointing outlook for the third quarter.

The Seattle tech giant posted net income of $197 million in the second quarter, or 40 cents per diluted share, on revenue of $38 billion. A year prior, the company reported earnings of $1.78 per share on revenue of $30.4 billion.

Wall Street was looking for earnings of $1.42 per share on revenue of $37.2 billion. "Our teams remain heads-down and focused on customers," CEO Jeff Bezos said in a statement. Operating expenses climbed from $29.12 billion a year ago to $37.33 billion in Q2.

Amazon Web Services remains the company's main growth driver, growing 42% year-over-year, and generating $916 million in operating income. That's more than double the North American business's $436 million in operating income. Its international business continues to lose money with an operating loss of $724 million.

In his statement, Bezos stressed the highlights of the quarter, such as the launch of Echo Show (an Echo smart speaker equipped with a video screen), the launch of four new Fire tablets, the expansion of Amazon Fresh to Germany and the expansion of Prime Now into Singapore.

The second quarter report did not include any information pertaining to Amazon's $13.7 billion acquisition of Whole Foods, since the deal has yet to close. However, Olsavsky said Thursday that Amazon is excited to acquire a "customer centric" business like Whole Foods. Amazon is "experimenting with a number of formats" in food services, including physical pick-up points for orders, as well as direct delivery. There's currently "no one solution," he said.

The results come as Amazon CEO Jeff Bezos briefly surpassed Microsoft cofounder Bill Gates to become the richest person in the world on Thursday. Amazon's stock has been on an absolute tear over the past two years, nearly doubling in price in that period.