- Despite the coronavirus pandemic, Amazon.com posted the biggest profit in its 26-year history on Thursday as online sales and its lucrative business supporting third-party retailers soared.
- In the after-hours trade, Amazon’s stock, the world’s largest online retailer, rose 5 percent.
- The company said revenue jumped 40 percent from a year earlier to US$88.9 billion.
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San Francisco • Despite the coronavirus pandemic, Amazon.com posted the biggest profit in its 26-year history on Thursday as online sales and its lucrative business supporting third-party retailers soared.
In the after-hours trade, Amazon’s stock, the world’s largest online retailer, rose 5 percent.
While rival brick-and-mortar retailers had to shut down stores during government-imposed lockdowns, Amazon employed 175,000 people in recent months and saw demand for its services surge.
The company said revenue jumped 40 percent from a year earlier to US$88.9 billion.
Amazon had forecast this could lose money in the just-ended second quarter as it planned to spend about US$ 4 billion on workers’ protective equipment and other COVID-19 related expenses. It did just that and the company still earned US$ 5.2 billion—doubling its net profit from a year ago.
Jeff Bezos, who founded the company in July 1994 and is the world’s wealthiest person, said in a statement: “This was another highly unusual quarter.”
This year, Amazon’s shares have increased by more than 60 percent, contributing to Bezos’s fortune as the company’s biggest stockholder. The S&P 500 is relatively flat.
Jesse Cohen, a senior analyst at Investing.com, said Amazon’s business model sets it up “to expand its e-commerce dominance even more broadly as the global COVID-19 pandemic continues to flare.”
Online store sales were up 48 percent in the second quarter to US$45.9 billion. Meanwhile, retailers have paid Amazon more for fulfilling and sponsoring their products to reach loyal customers of the company. That resulted in a 52 percent and 41 percent jump in revenue from seller services and other revenue such as from ads.
As businesses moved to virtual offices in the pandemic, Amazon’s cloud services also saw greater demand. Revenue from Amazon Web Services (AWS), which provides data storage and processing resources in the cloud, rose almost 29 percent to US$10.81 billion.
Nevertheless, this fell short of forecasts of US$ 10.95 billion by analysts, according to Refinitiv’s IBES data. The cloud business of rival Alphabet’s Google meanwhile was up over 43 percent year over year.
Technology analyst Patrick Moorhead said, “AWS continued to grow, albeit at a slower rate than last quarter.”