You will be redirected back to your article in seconds

Amazon Misses Q2 Income Expectations as Sales Boom to $38 Billion

Amazon posted earnings for the second quarter of 2017 that fell dramatically short of investor expectations, even as the ecommerce giant boosted revenue 25%.

Net sales roles to $38.0 billion in the second quarter, topping Wall Street estimates, compared with $30.4 billion in the second quarter of 2016.

Amazon’s net income came in at 40 cents per diluted share for Q2, versus $1.78 a year ago, as it ramped up investments. It was Amazon’s ninth straight quarter of profitability, after the company spent years spilling red ink. But Wall Street had expected Amazon to post adjusted earnings per share of $1.42, and shares dropped more than 3% in after-hours trading Thursday after hitting record highs earlier in the day.

For Q2, Amazon’s total operating expenses ballooned to $37.3 billion, up 28% year over year. That included a 43% increase in spending on “technology and content,” to $5.55 billion. Marketing spending in the quarter jumped 44%, to $2.2 billion. Amazon CFO Brian Olsavsky, on a call with analysts, said spending on video content will increase in Q3 on both a sequential and year-over-year basis but he declined to provide specifics.

Amazon is already huge, and it continues to grow bigger. Last month, the company announced a deal to buy Whole Foods for $13.7 billion, which would be the largest acquisition in Amazon’s history.

“Our teams remain heads-down and focused on customers,” Jeff Bezos, Amazon founder and CEO, said in announcing the earnings.

Bezos briefly became the world’s wealthiest individual Thursday — with a net worth of more than $92 billion as Amazon stock surged in the morning — surpassing Microsoft co-founder Bill Gates, according to Forbes. But the company’s shares declined in afternoon trading, putting Bezos back at No. 2.

In his prepared comments, Bezos called out the launch of “Inside Edge” on Amazon Prime Video, a 10-episode series about the worlds of cricket and entertainment, which is the first of 18 Indian original series.

The conglomerate highlighted Amazon Studios’ 16 Emmy Awards nominations this year, including noms for original series “Transparent,” “The Man in the High Castle,” “Mozart in the Jungle,” and “Catastrophe.” It also called out the slate of upcoming originals, including series “The Last Tycoon,” “The Tick,” “The Marvelous Mrs. Maisel,” and the second season of “The Grand Tour.”

Upcoming movies from Amazon Studios set for theatrical debuts include Richard Linklater’s “Last Flag Flying,” Todd Haynes’ “Wonderstruck,” and Woody Allen’s “Wonder Wheel.” Amazon is self-distributing “Wonder Wheel,” selected as the closing-night film of this year’s New York Film Festival, instead of working through other studios.

Overall, the company also hired more than 30,000 new employees in Q2, with 382,400 full- and part-time workers as of the end of June. Amazon also reiterated that it signed up a record number of Prime members on its third annual Prime Day on July 11; however, the company doesn’t disclose how many Prime members it has, while the shopping promo happened in the third quarter.

The Amazon Web Services hosting unit continued to be a standout for the company, with sales up 42% to $4.1 billion. AWS contributed $916 million of operating profit in Q2, rising 28% year over year. Customers of AWS include Comcast, Netflix, Spotify, Discovery Communications, AOL, Condé Nast and Ancestry.

More Digital

  • Alibaba Buys 8% Stake in Chinese

    Alibaba Buys 8% Stake in Chinese Video Platform Bilibili

    Alibaba has purchased an 8% stake in the Chinese online video platform Bilibili, the official Xinhua news agency reported. Bilibili is one of China’s top video streaming and entertainment platforms, with about 92 million monthly active users and 450 million page-views per day. Founded in 2009, it was listed on the NASDAQ last March. Alibaba’s [...]

  • Clevver-Logo

    Hearst Magazines Buys Clevver's Pop-Culture YouTube Channels After Defy's Demise

    Hearst Magazines has snapped up Clevver, a network of female-skewing lifestyle and pop-culture news YouTube channels that had been owned by now-defunct Defy Media. Clevver was left homeless after Defy’s sudden shutdown in November; its principals said at the time they were looking for a new home. Hearst Magazines sees a digital fit with Clevver’s [...]

  • "Brother" -- Episode 201-- Pictured (l-r):

    CBS Interactive's Marc DeBevoise on Streaming Boom, Content Strategy, and Apple

    Not everyone wants or needs to be Netflix to succeed in the streaming space. And not everyone sees Apple’s enigmatic new service as a threat. Even as rival streaming services offer gobs of content, CBS Interactive’s president and COO Marc DeBevoise sees the company’s targeted original programming strategy continuing to attract viewers to its All [...]

  • Rhett-Link-Good-Mythical-Morning

    Rhett & Link's Mythical Entertainment in Talks to Acquire Smosh (EXCLUSIVE)

    Smosh, the YouTube comedy brand left stranded after parent company Defy Media went belly-up, may be about to get a new business partner. Mythical Entertainment, the entertainment company founded by top YouTube comedy duo Rhett & Link, has been in talks about acquiring the Smosh brand, sources told Variety. Multiple potential buyers came forward to [...]

  • Pokemon Go

    Proposed 'Pokémon Go' Lawsuit Settlement May Remove Poké Stops, Gyms

    A proposed settlement in the class action lawsuit against “Pokémon Go” developer Niantic could remove or change a number of Poké Stops and Gyms in the popular augmented reality game. The proposed settlement was filed in a California court on Thursday and applies to anyone in the U.S. who owns or leases property within 100 meters [...]

  • Skyline of Doha at night with

    Qatar's beIN Rallies Support From U.S. Companies Against Pirate Broadcaster beoutQ

    Qatari powerhouse beIN Media Group has rallied support from American sports and entertainment entities, including Discovery and Fox, behind its request that the U.S. government place Saudi Arabia on its watch list of top intellectual property offenders. The Doha-based broadcaster, a state-owned spinoff of Al Jazeera news network, accuses the Saudi government of harboring pirate broadcaster [...]

More From Our Brands

Access exclusive content