E-commerce giant Amazon reported an impressive second quarter yesterday, including net income of $6.7 billion, or $0.65 per diluted share. This is more than double the company’s net income of $3.2 billion for the first quarter of the year, and an $8.7 billion swing from its net loss of $(2.0) billion in the second quarter of 2022.

Amazon also reported net sales of $134.4 billion, an 11% increase compared to net sales of $121.2 billion in the second quarter of 2022. This includes $59.0 billion in net product sales and $75.4 billion in net service sales.

Amazon CEO Andy Jassy called it “another strong quarter of progress for Amazon.” He talked about lowering costs in their fulfillment network while providing Prime members with fast delivery. Jassy also addressed the elephant in the room – the loss of 27,000 jobs.

“We also made the very difficult decision to eliminate about 27,000 corporate roles. Like most leadership teams, we’ll continue to evaluate what we’re seeing in our business and proceed adaptively. But while we’ve taken several actions to streamline our costs, we’ve been able to do so while still pursuing the key strategic long-term investments that we believe can meaningfully make customers’ lives better and potentially change what Amazon is,” Jassy said on the August 3 earnings call. “We have a lot of work in front of us, but I like the direction we’re headed and strongly believe our best days are in front of us.”

Second-quarter financial highlights

Amazon shared the following second-quarter financial highlights:

• North America segment sales were $82.5 billion, an 11% increase.
• International segment sales were $29.7 billion, a 10% increase.
• AWS segment sales were $22.1 billion, a 12% increase.
• Operating income was $7.7 billion, compared to $3.3 billion in the second quarter of 2022.
• Amazon had $50.1 billion in cash, cash equivalents and restricted cash at the end of the quarter.

Second-quarter operational highlights

• Though Prime Day was in the third quarter, Amazon included the successful two-day shopping event in its earnings report. Prime members purchased over 375 million items and saved more than $2.5 billion.
• The company reported that customers have saved more than $1 billion in the last 12 months by using Amazon’s Subscribe & Save option, which is often the default purchase option.
• Amazon received 68 Primetime Emmy Award nominations, including nominations for The Marvelous Mrs. Maisel (Prime Video), Jury Duty (Freevee) and Wednesday (MGM).
• The company introduced new Echo devices, expanded the Fire tablet line, added Fire TV Channels, expanded offerings for Alexa Smart Properties, and launched Amazon Hub Delivery in the US.
• Amazon was named the top corporate giver in the Puget Sound metro region by the Puget Sound Business Journal.
• They ranked number 1 on LinkedIn’s Top Companies list.
• The company doubled capacity at their Disaster Relief Hub in Atlanta where they have pre-stocked 2.4 million relief items in anticipation of the 2023 hurricane season.
• Amazon awarded 400 scholarships for students from underserved and underrepresented communities.
• They also committed to hiring at least 5,000 displaced refugees in Europe by 2026.

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Third-quarter guidance

Amazon estimates the following for the third quarter of 2023:

• Net sales between $138.0 billion and $143.0 billion, for growth between 9% and 13% year-over-year
• Operating income between $5.5 billion and $8.5 billion, compared to $2.5 billion in the third quarter of 2022

Insider Take

Investors were apparently not impressed. Stock dipped slightly from August 1 to August 3. CNN reports that Amazon stock “surged” in after-hours trading, but there was only a $0.70 increase between August 2 and August 3. Regardless of the stock price, Amazon reported a solid quarter, showing that it is on the mend after rightsizing. While that was incredibly painful for those directly impacted, shedding 27,000 jobs and finding efficiencies seems to have helped turn things around. With Prime Day sales recorded in the third quarter, Amazon will likely have an even stronger quarter.

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