Amazon.com Inc.'s record profit came to an end Thursday and equities fell in late trading despite strong sales growth.
posted a gain of $ 2.6 billion or $ 5.22 per share in the second quarter, compared to $ 5.07 a year ago, but below estimates the analysts lay. Revenue was $ 63.4 billion, compared to $ 52.9 billion a year ago. Of this, $ 8.38 billion went to the cloud computing business of Amazon Web Services. According to FactSet, Amazon analysts expect an average of $ 5.56 in revenue per share of $ 62.52 billion, with $ 8.48 billion in AWS credited.
The Amazon share was down more than 2% after the release of earnings after the close. The stock closed the month down 1
increased by 20.5%.
Amazon reported a record $ 10 billion in revenue in 2018, more than three times its previous high, as previous high spending slowed. In the second quarter a year ago, Amazon posted a record profit for the quarter, surpassing even the high-volume holiday purchasing phases. Executives explicitly stated that spending was slowing down at this time. Amazon had surpassed this record for each of the three quarters by a new record, until the report on Thursday broke through this series.
However, management has signaled that spending will rise again: Brian Olsavsky, chief financial officer, announced that Amazon wanted to spend around $ 800 million to limit prime-subscriber deliveries to one day. The company announced in the quarter that it would spend another $ 700 million on employee training. This led to a disappointing forecast for second quarter operating income.
The company's expenditures rose sharply in various areas. Amazon announced that it has spent $ 9.27 billion on performance in the quarter, an increase of nearly 17% over the previous year. Marketing revenue of $ 4.29 billion, up 48%; and $ 9.07 billion in technology and content, including rights to the Amazon Prime Streaming service, plus 25%. Total cost of ownership increased 18.6% to $ 36.34 billion.
AWS revenue missed consensus analyst estimates by approximately $ 100 million, but the operating income of the cloud computing segment once again accounted for the largest share of Amazon's total revenue. AWS reported operating income of $ 2.12 billion, while the company's quarterly operating income was $ 3.08 billion.
For the third quarter, Amazon projected sales of $ 66 to $ 70 billion, and operating income of $ 2.1 to $ 3.1 billion would have fallen from $ 3.7 billion a year ago. The quarter started with Prime Day, Amazon's bid to establish a shopping holiday during the summer months, which the company said already exceeded Black Friday and Cyber Monday sales together.
Such an event typically increases sales but may impact profit margins as Amazon sells discounted items and increases delivery time by one day. This is one of the reasons why analysts have warned investors that sales will rise this year, but profit can be a problem. Our view is important because Amazon is still a growth story and it's too early for the company is to be in harvest mode.