Amazon.com Inc.'s record-high revenue rally ended on Thursday, with stocks falling in late trading despite strong sales growth.
had revenue in the second quarter of $ 2.6 billion, or $ 5.22 per share, up from $ 5.07 a year ago, but lower than analysts' estimates. Revenue was $ 63.4 billion, up from $ 52.9 billion a year ago, and Amazon Web Services data processing operations accounted for $ 8.38 billion of the total. On average, analysts expected Amazon to report revenues of $ 5.56 per share on sales of $ 62.52 billion, with $ 8.48 billion being credited to AWS, according to FactSet.
Amazon's shares fell more than 2% in retrospect after the release of revenue report. Stocks closed on Thursday with a decline of 1
has achieved 20.5%.
Amazon reported record profits of more than $ 10 billion in 2018, more than three times the previous height, as previous poor spending declined. In the second quarter a year ago, Amazon reported record quarterly results, peaking even at high volume shopping periods, and managers specifically cited a downturn in spending at that time. Amazon had beaten this surplus for a new record in each of the three quarters, until Thursday's report broke that line.
Management has signaled that spending will increase again: In the discussion of the results from the first quarter earlier this year, CFO Brian Olsavsky revealed that Amazon was planning to spend about $ 800 million to get Prime subscriber's deliveries down to a day's waiting time, and The company said during the quarter that it planned to spend another $ 700 million on employee training. This led to a disappointing second quarter operating profit forecast.
The company's expenses increased sharply in a number of areas. Amazon reported that it spent $ 9.27 billion in the quarter, up nearly 17% from a year ago; $ 4.29 billion in marketing, up 48%; and $ 9.07 billion on technology and content, including rights for the Amazon Prime streaming service, up 25%. Total operating expenses were $ 36.34 billion, an increase of 18.6%.
AWS revenue missed consensus analysts with approx. $ 100 million, but the cloud computing segment's revenues were again most of Amazon's total. AWS had operating revenues of $ 2.12 billion, while the entire company's quarterly operating profit was $ 3.08 billion.
For the third quarter, Amazon predicted a $ 66 to $ 70 billion revenue, with an operating profit of $ 2.1 to $ 3.1 billion, down from $ 3.7 billion a year ago. The quarter began with Prime Day, Amazon's attempt to establish a shopping holiday in the summer months that the company had already said exceeded sales from Black Friday and Cyber Monday together.
Such an event will typically increase revenue, but may thin profit margins when Amazon sells discounted goods and ramps up one day's delivery. That's one of the reasons analysts have warned investors to expect sales to increase this year, but profits may be a problem.
"We expect the Amazon story to shift back to top-line growth in the second half of 2019, which in our view is important as Amazon is still a growth story and it's too early for the company to be in harvest mode," JPMorgan wrote. analysts in a note earlier this month.