Amazon earnings show sharp slowdown in e-commerce

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Aaron B. Bernstein / Getty Images

Amazon shares are headed lower in late trading Thursday after the e-commerce and cloud computing giant reported mixed results for the June quarter, with better-than-expected earnings but sales falling short of Wall Street estimates.

The error reflects a shortage of Amazon’s e-commerce business, which has suffered a sharp slowdown in recent growth trends. The e-commerce slowdown was partially offset by better-than-expected results in the company’s cloud computing, advertising, and reseller segments.

For the quarter, Amazon (stock ticker: AMZN) reported $113.1 billion in sales, up 27% from a year ago, or 24% when adjusted for currency, in the middle of the company’s $110 billion to $116 billion guidance range, and a little shy of Wall Street consensus of $115.4 billion. Earnings were $15.12 per share, ahead of analysts’ expectations of $12.28 per share. Operating income was $7.7 billion, well above the company’s projected range of $4.5 billion to $8 billion, and just below the Wall Street consensus of $7.8 billion.

Revenue from online stores was $53.2 billion, up 16% from last year, or a 13% currency-adjusted, well below the street’s forecast of $57.3 billion. That was down from the 41% growth in the March quarter and 49% a year earlier.

Amazon Chief Financial Officer Brian Olsavsky said on a call with analysts that since May, the company’s growth — apart from Prime Day — has fallen into its mid-teens, from recent growth in the 35% OMR 40% range, and 44% growth in the March quarter. . The company sees growth in the September quarter in the 10%-16% range.

Olsavsky cited widespread availability of vaccines and consumers leaving the home as factors in the slowdown, as well as difficult comparisons with last year.

Olsavsky added that the company expects to continue a “challenging corporate pattern” over the next few quarters until the company has passed the pandemic.

Third-party services revenue was $25.1 billion, up 38%, or 34% adjusted for currency, above expectations of $24.8 billion. But that was nonetheless a slowdown from 60% in the March quarter and 53% a year earlier.

Amazon Web Services, the company’s cloud service, posted revenue of $14.8 billion, up 37%, well above Street’s estimate of $14.3 billion, accelerating from 32% growth in March and 29% a year earlier.

“Other” revenue, mostly from advertising, was $7.9 billion, up 87% or 83% on a currency rate basis, ahead of the consensus at $7 billion, consistent with recent strong advertising data from Facebook, Alphabet and other companies. that relies on ads. In-store revenue was $4.2 billion, up 11%, topping Street View at $3.9 billion.

Sales growth in North America, excluding foreign exchange effects, slowed to 21% in the quarter, down from 39% in March and 44% a year earlier. North American operating margin was 4.7%, down from 5.4% in March, although up from 3.9% a year earlier. International sales are up 26%, down from 50% in the March quarter, and 41% in the prior year quarter.

For the September quarter, Amazon expects sales of between $106 billion and $112 billion, contrary to the street consensus at $118.6 billion, with operating income of $2.5 billion to $6 billion, versus $6.2 billion a year ago. The company said the guidance assumes about $1 billion in costs related to Covid-19.

Amazon shares fell 7.1% in late trading. The stock is up 11% in 2021, lagging the S&P 500’s 18% gain.

Write to Eric J. Savitz at [email protected]

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