The News: Amazon’s Q2 2022 revenue increased to $121.2 billion in the quarter ending June 30, up seven percent from $113 billion brought in by the broadly diversified ecommerce, cloud, advertising and services company one year ago. In its earnings report on July 28, Amazon showed mixed results but positive trajectories for many of its business units, which helped Amazon shares rise by 13 percent in extended trading on July 29. Read the Press Release about the Q2 2022 earnings on Amazon’s investor website.
Amazon Q2 2022 Revenue Rises to $121.2B, Up 7% From Q2 2021
Analyst Take: Amazon’s Q2 2022 results came in better than analysts expected, which is a bright spot, especially considering the powerful macroeconomic headwinds and unsteady world conditions that continue to affect Amazon’s broad range of business units and other companies in general.
But Amazon’s guidance for the rest of 2022 is even better, showing that the company is above the fold for demand in a tougher macro environment. Yes, there are some disappointments – its investment in Rivian Automotive, the electric adventure vehicle company, led to a $2 billion loss for Q2, and its Amazon Web Services cloud unit experienced a business slowdown in terms of percentage growth (33%), but that business has also been a profit boon for Amazon and is now generating close to $20 billion per quarter—a slowdown by AWS standards, but great growth for its cloud business and along with Azure, IBM, and GCP this quarter an indicator that cloud demand is robust.
Overall, company still has plenty to be optimistic about across its operations.
Here are Amazon’s Q2 2022 earnings results by the numbers:
- Q2 2022 revenue of $121.2 billion, up seven percent from $113 billion in the same quarter one year ago. The revenue figure beats analyst consensus estimates of $119 billion from Yahoo Finance. The revenue figure is also on the high end of Amazon’s own prior guidance, which estimated Q2 earnings between $116 billion to $121 billion.
- Q2 2022 earnings per basic share (EPS) saw a loss of $0.20 per share, compared to earnings of $0.77 per share in 2021. Analysts with Yahoo Finance had expected EPS of $0.13 per share.
- Q2 2022 net loss of $2 billion, compared to a net income of $7.8 billion for the quarter one year ago. The loss, however, is being attributed by the company due to losses on Amazon’s investments in Rivian, and not due to losses elsewhere in the company’s operations. The net loss includes a pre-tax valuation loss of $3.9 billion included in non-operating expense from Amazon’s common stock investment in Rivian.
- Q2 2022 operating income of $3.3 billion, down 132 percent from $7.7 billion one year ago.
Losses for Rivian and reduced revenue for AWS cloud slowed Amazon’s Q2 performance a bit, but things are still moving forward with optimism and investors were able to look past the Rivian impact. Perhaps the recent launch of part of its Rivian fleet was seen as more optimistic while the short-term gyration in the investment seen as less material.
Amazon also said that in response to changing market conditions over the quarter, it has reduced its staff by 99,000 workers through layoffs, leaving it with 1.52 million employees. Amazon’s pre-pandemic workforce was almost doubled in size during the pandemic as the company ramped up to deliver online orders to customers who were under Covid-19 lockdowns across the U.S. and elsewhere. This layoff was largely based upon short-term pull backs that were caught at the end of the previous quarter and the company will be looking to continue to evaluate its workforce on a real-time basis.
What It All Means for Amazon
All the world’s current problems, including inflation, foreign exchange rate changes, the lingering Covid-19 pandemic, continuing supply chain issues, the Russian war in Ukraine, climate change issues, and more, certainly affect every company today. But with Amazon as diverse as it is across its businesses, it is in a bullseye position to be broadly affected by these challenges.
With a company so large, no one or two revenue figures or losses determine its overall fate, and that is the case here with Amazon’s Q2 2022 figures. Amazon is still one of the world’s most influential companies to watch.
Things have changed for Amazon since the original pandemic shutdowns went away, returning shoppers to brick and mortar stores and lowering online shopping activities starting in late 2021. Those slowdowns in Amazon’s ecommerce business are evident and were expected once the pandemic began to shed its grip on customers around the world.
And in reaction to the start of the 2020 pandemic and the increased pressures it brought on, Amazon was forced to make deeper investments in labor, inventory costs, supply chain work-arounds, while other business expansion ate into its margins. We are still seeing the effects of these adjustments and strategies today, which are to be expected as the “new normal” continues to play itself out across society.
What is most notable about Amazon’s Q2 2022 results is that while some analysts expected earnings and EPS numbers that would be disappointing, when the actual numbers came in, they were better than what those analysts expected. The loss is certainly not ideal, the overall figures were not as bad as some suggested, which is a testament to Amazon’s business diversity, market strength and executive leadership.
Revenue by Segment
Here are Amazon’s Q2 2022 revenue figures by business segment:
- AWS revenue $19.7 billion, up 33 percent from $14.8 billion one year ago.
- Online stores revenue $50.9 billion, down four percent from $53.1 billion one year ago.
- Subscription services revenue $8.7 billion, up 10 percent from $7.9 billion one year ago.
- Advertising services revenue $8.75 billion, up 17 percent from $7.45 billion one year ago.
- Third-party seller services revenue $27.4 billion, up nine percent from $25 billion one year ago.
- Physical stores revenue $4.7 billion, up 12 percent from $4.2 billion one year ago.
- Other sales revenue $1 billion, up 116 percent from $463 million one year ago.
Amazon’s Q3 2022 Financial Guidance
As part of its Q2 2022 earnings report, Amazon also provided earnings guidance for the third quarter.
Net sales are expected to range from $125 billion to $130 billion, or to grow between 13 percent and 17 percent compared with the third quarter of 2021, according to the company’s guidance. The guidance anticipates an unfavorable impact of about 390 basis points from foreign exchange rates.
Amazon estimates that its Q3 2022 operating income will be between $0 and $3.5 billion, compared with $4.9 billion in the third quarter of 2021.
In a world filled with continuing uncertainty, Amazon, the gorilla of the global marketplace, is showing the way on how to do business in uncharted times. It is seeing growth amid the uncertainty and is making real-time changes on the fly as it maneuvers the latest headwinds.
That is what smart companies do to survive and grow, whether they are large or small.
It will be interesting to watch Amazon as it reacts to the market changes, rises and dips to come through the rest of 2022 and into 2023. Our instinct is that Amazon will remain an economic engine even in an economic slowdown and not to bet against Amazon continuing to show robust results even amid difficult times.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.