Amazon beats revenue estimates but misses on profit in Q2

By : |July 28, 2017 0

Amazon’s earnings plunged 77 percent in the second quarter of 2017 as the company continues to invest in new areas of growth, leading to its lowest quarterly net income since the third quarter of 2015.

The company posted a revenue of $37.96 billion against the expected $37.18 billion. Sales were up by 25 percent to $38 billion compared to the same quarter last year but expenses grew even faster. The company’s already modest operating margins decreased from 4.2 percent a year ago to 1.7 percent last quarter.

Not so surprisingly, company’s growth driver continues to be Amazon Web Services (AWS) growing 42 percent year-over-year, and generating $916 million in operating income.

According to Amazon’s press release, Prime Day was huge- it was “the biggest global shopping event ever for Amazon with more new Prime members joining Prime than any single day in Amazon history.” 40 million units were sold in one day and Amazon devices killed it, with the Echo Dot the best-selling product on the site.

Amazon’s third quarter operating income guidance in the range of a $400 million loss to $300 million profit is also an indication that the company’s investment cycle would continue. CFO Brian Olsavsky said third quarter typically sees lower operating income because it has to prepare for the holiday peak season. Revenue guidance came in between $39.25 billion and $41.75 billion.

The company’s shares fell more than three percent in after-hours trading.

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