Amazon Maintains Profit Run, but Sales Miss Expectations in Pandemic First

Amazon Maintains Profit Run, but Sales Miss Expectations in Pandemic First


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com Inc. reported strong financial results that showcased its dominance even as a slight slowdown in e-commerce sales highlighted the challenge of sustaining the unfettered growth it has logged during the pandemic.

The Seattle-based tech giant took home almost $30 billion in profit in the past year as millions of consumers moved online to meet their shopping, entertainment and work needs, adding to its power. Amazon’s cloud-computing business picked up speed after a period of slower expansion, and its advertising business continued to grow rapidly.

But as with other large technology companies, investors have begun to question whether such momentum can be maintained. Amazon posted second-quarter sales of $113.1 billion, slightly less than the $115.4 billion predicted by analysts polled by FactSet. Profit was $7.8 billion, or $15.12 a share, exceeding analysts expectations of $12.28 a share.

Its shares declined about 7% in after-hour trading Thursday. The company said it expects sales of $106 billion to $112 billion for the current quarter and operating income between $2.5 billion and $6 billion.

Amazon finance chief

Brian Olsavsky

said Thursday he expects the step-down in sales results to continue as the economy opens more and sales stabilize from their outsize growth earlier in the pandemic.

“People are getting out more and doing things besides shopping,” Mr. Olsavsky said in a call with reporters. Amazon continues to hire at a rapid pace, adding 64,000 workers in the second quarter. Mr. Olsavsky, who has acknowledged the difficulty of hiring workers in what has been a tight labor market, said recent wage increases the company has implemented represent “one of the bigger elements of inflation in our business right now.”

Amazon’s online store sales, which had been growing at a high double-digit rate, eased to 16% year-over-year growth for the quarter. The decline came even as Amazon moved up the date of its annual Prime Day shopping event, which is usually held in the third quarter.

The results made clear the difficulty Amazon will have matching results from 2020, when an avalanche of shoppers turned to online options during lockdowns. Amazon had previously signaled that such demand was sustainable.

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Still, some analysts said a slowdown might be inevitable.

“That’s something we expect to happen because of the extraordinary circumstances of last year,” said Ron Josey, an analyst with JMP Securities.

Other technology companies also faced a lukewarm reception from investors this week, even after posting record profits.

Apple Inc.

reported strong iPhone sales and more than $21 billion in profit, its highest-ever spring-quarter total, but its shares fell slightly the following day.

Microsoft Corp.

fell in after-hours trading even though its Azure cloud-computing segment registered year-over-year sales growth of 51%.

The April-to-June stretch marked Amazon’s last quarter under

Jeff Bezos

as chief executive; the company’s founder left the role on July 5 to become executive chairman.

Andy Jassy

—an Amazon lifer who headed its cloud-computing unit, Amazon Web Services—is expected to bring an ultra-detail-oriented management style to the company’s top position, The Wall Street Journal reported earlier this month.

Mr. Olsavsky said the company is monitoring the spread of the Covid-19 Delta variant and is focused on helping employees get vaccinated. Amazon hasn’t mandated that staff receive a Covid-19 vaccine to return to offices but has required proof of vaccination to be mask-free in corporate offices.

The company continues to expect workers to return to its offices in September, he said, with a general requirement that they be on campus three days a week.


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Demand for computing power has long bolstered Amazon’s earnings. Such needs have grown during the pandemic, as more companies look to boost server capacity and software tools. Amazon Web Services, which offers such tools, generates a significant portion of Amazon’s operating income. Its sales, which had been slowing in recent quarters, picked back up to start the year. Sales for the cloud unit totaled $14.8 billion in the second quarter, a 37% increase from a year earlier.

Amazon has also become a dominant force in advertising behind Google and

Facebook Inc.

The company’s ad unit, which has been expanding at a high double-digit clip. grew 87% year-over-year in the second quarter.

Amazon’s trillion dollar valuation hasn’t stopped it from trying to add businesses to its empire, even as its power has received more scrutiny from policy makers. Amazon in May announced it had agreed to acquire the Hollywood studio MGM in a deal valued at $8.45 billion. The acquisition is being reviewed by the Federal Trade Commission.


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The FTC also has open a wide-ranging antitrust investigation into Amazon’s business practices. In addition, Amazon is battling a range of bills in Congress aimed at reining in the market dominance of big tech companies. Amazon has defended its competitive practices in part by arguing that it offers products and services to benefit customers.

Aside from regulatory concerns, Mr. Jassy faces internal challenges as Amazon’s new CEO. The company last week said it launched an investigation at Amazon Web Services after an employee petition alleged that the cloud unit systematically discriminated against women and minority groups. The Washington Post first reported on the investigation and petition, which garnered hundreds of signatures.

In an email to the petition authors reviewed by the Journal, AWS Chief Executive

Adam Selipsky

said Amazon had hired an outside investigation firm and that he would review its findings.

Write to Sebastian Herrera at

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