Amazon revealed its second-quarter 2022 earnings Thursday, reporting a loss of $2 billion but an increase in ad sales and revenue, which it attributes in part to the upcoming debuts of “Thursday Night Football” (Sept. 15) and “The Lord of the Rings: The Rings of Power” (Sept. 2).
Wall Street forecasted earnings per share (EPS) of 13 cents on $119 billion in revenue, according to analyst consensus data provided by Refinitiv. Amazon reported a net loss of $2 billion, or -20 cents per diluted share, on $121.2 billion in revenue for the period of April 1-June 30. That loss includes a pre-tax valuation loss of $3.9 billion included in non-operating expense from Amazon’s common stock investment in Rivian Automotive. With favorable adjustments not counting Rivian, Amazon would have reported a gain.
Analysts expected Amazon Web Services revenue to hit $19.56 billion and for ad sales to come in at $8.65 billion for the quarter, per Street Account. Amazon revealed AWS revenue was at $19.7 billion and ad sales also beat expectations and reached $8.76 billion.
Operating income decreased to $3.3 billion in the second quarter, compared with $7.7 billion year-over-year. Free cash flow decreased to an outflow of $23.5 billion compared with an inflow of $12.2 billion in 2021.
Amazon is projecting that net sales will be between $125-$130 billion in Q3, growing between 13% and 17% compared with Q3 2021.
These better-than-expected results helped Amazon stock rise by approximately 11% in after-hours trading (Amazon stock closed Thursday at $122.28 per share), as buyers found confidence following the previous quarters results.
In April, Amazon reported it had dramatically missed Wall Street’s earnings expectations for the first quarter of 2022, as the world’s biggest online retailer saw a significant deceleration in top-line growth and faced higher costs in the period.
Overall, the company posted Q1 revenue of $116.4 billion, up 7%, in line with expectations — but representing Amazon’s slowest year-over-year growth rate in two decades. Amazon reported a net loss of $3.8 billion in the first quarter, or -$7.56 per diluted share, its first quarterly loss since Q2 2015.
Amazon has been looking for ways to increase revenue amid rising expenses and inflation. When it announced its Q4 2021 earnings results in February, the company revealed it would be raising the price of Prime memberships in the U.S., with the annual fee jumping from $119 to $139 — its first increase in nearly four years. In addition, the monthly fee for Prime rose from $12.99 to $14.99. Earlier this week, Amazon announced it was hiking the price of a Prime membership in Europe and U.K.
“Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” Amazon CEO Andy Jassy said in a letter to shareholders accompanying the Q2 earnings. “We’re also seeing revenue accelerate as we continue to make Prime even better for members, both investing in faster shipping speeds, and adding unique benefits such as free delivery from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting Sept. 15 and releasing the highly anticipated series ‘The Lord of the Rings: The Rings of Power’ on Sept. 2.”
The e-commerce giant also boasted in its report that its 2022 Prime Day promotion from July 12-13 was its biggest ever, writing: “Prime members worldwide shopped more and saved more this Prime Day than any other Prime Day event, purchasing more than 300 million items and saving more than $1.7 billion.”
Amazon executives will host a conference call at 5:30 p.m. ET to discuss the quarter in greater detail.