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Kaplan</a></h6> </div> <div class="pec-social-post"> <ul> <li><a onclick="ga('send','event','Article Top','Social Linkedin');" data-via="practicalecomm" data-url="https://pec-ly.com/?6kbE" target="_blank" data-size="small" data-dir="left" rel="noreferrer external noopener" href="https://www.linkedin.com/shareArticle?mini=1&url=https%3A%2F%2Fpec-ly.com%2F%3F6kbE&title=AWS+Boosts+Amazon%26%238217%3Bs+Q2+2022+Results" title="Click to share this post on Linkedin" data-wpel-link="external"><img src="https://www.practicalecommerce.com/wp-content/themes/pec/images/linkedin.svg" width="40" height="40" alt="Linkedin Share"/></a></li> <li><a onclick="ga('send','event','Article Top','Social Reddit');" data-via="practicalecomm" data-url="https://pec-ly.com/?6kbE" target="_blank" data-size="small" data-dir="left" rel="noreferrer external noopener" href="https://reddit.com/submit?url=https%3A%2F%2Fpec-ly.com%2F%3F6kbE&title=AWS Boosts Amazon’s Q2 2022 Results" title="Click to share this post on 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link"/><div class="copy-alert" style="display: none;">Link copied</div></a></li> </ul> </div> </div> <div class="entry-content"> <p>Amazon’s financial results for the quarter ended June 30 were affected by the slowdown in online consumer purchasing, like many other ecommerce retailers and platforms.</p> <p>The company acknowledged inflation-induced cost pressures, especially in the supply chain. Additionally, Prime Day was in the second quarter in 2021 but in the third quarter this year, negating a Q2 sales boost.</p> <h3>Financial Results</h3> <p>Amazon reported sluggish sales and a net loss for the second straight quarter. Nevertheless, Q2 revenue exceeded analysts’ expectations, coming in at $121.2 billion versus the expected $119.5 billion. Revenue for Q2 2021 was $113.1 billion.</p> <div id="everviz-NJNxegIu8" class="everviz-NJNxegIu8"><script src="https://app.everviz.com/inject/NJNxegIu8/" defer="defer"></script></div> <p>While product sales fell, service revenue increased by 17.4%, from $55.1 billion in Q2 2021 to $64.7 billion in Q2 this year — primarily from Amazon Web Services.</p> <p>The Q2 2022 net loss was $2.0 billion, compared with net income of $7.8 billion in Q2 2021. The net loss includes a pre-tax non-operating write-down of $3.9 billion from the company’s <a href="https://www.practicalecommerce.com/rivian-write-down-moves-amazon-to-q1-2022-net-loss" data-wpel-link="internal">investment</a> in electric carmaker Rivian. <span style="color: #ffffff;">fhpcn</span></p> <p>Operating expenses grew 12% year-over-year, from $105.3 billion in Q2 2021 to $118 billion this year. Operating income decreased 57% to $3.3 billion this year, compared with $7.7 billion in Q2 2021.</p> <p>In its 10-Q, Amazon said the operating loss for North America — $622 million in Q2 2022 — was primarily due to increased <a href="https://www.practicalecommerce.com/how-to-price-shipping-and-handling-fees" data-wpel-link="internal">shipping, </a>fulfillment, and transportation costs; high wage rates and incentives; and fulfillment network inefficiencies. The same factors applied to its international unit’s $1.8 billion operating loss.</p> <p>Nonetheless, North American ecommerce sales increased 10.2% year-over-year from $67.6 billion in Q2 2021 to $74.4 billion this year, while international sales fell about 12% from $30.7 billion to $20.7 billion. Much of the global reduction was due to foreign exchange rates.</p> <p>Sixty-two percent of Amazon’s overall product sales were in North America, an increase of 2% over the same period last year. Amazon Web Services contributed 22% of total revenue, an increase from 13% in Q2 2021.</p> <p>Subscription sales, including Amazon Prime, rose 10% to $8.7 billion. Seller services revenue rose 9.1% to $27.4 billion, and advertising sales rose 17.5% to $8.8 billion in year-over-year results. Third-party sellers accounted for 57% of all items sold on Amazon in the quarter, the highest percentage ever, according to Chief Financial Officer Brian Olsavsky during the earnings call.</p> <h3>Amazon Web Services</h3> <p>Amazon Web Services was the star this quarter, counterbalancing sluggish growth in ecommerce. Year-over-year quarterly net sales grew 33% from $14.8 billion in Q2 2021 to $19.7 billion in 2022. Operating income from AWS increased 36% year-over-year from $4.2 billion in Q2 2021 to $5.7 billion this year. During the 2022 second quarter, AWS announced new customer agreements with Delta Airlines and British Telecom, among other enterprises.</p> <p>In the earnings call, Amazon staff stated that over half of capital investment for the entire 2022 year would focus on technology infrastructure for AWS.</p> <h3>Third Quarter Guidance</h3> <p>In the call, Amazon staff projected Q3 2022 net sales to range from $125 billion to $130 billion, an increase of 13% to 17% over Q3 2021. Operating income will range from $0 to $3.5 billion, compared with $4.9 billion in Q3 2021. The guidance includes an unfavorable impact on foreign exchange rates.</p> <h3>Shopify and Amazon</h3> <p>I reported last week on Shopify’s poor second-quarter <a href="https://www.practicalecommerce.com/the-details-of-shopifys-massive-q2-2022-loss" data-wpel-link="internal">performance</a>, and I’ve been following Wall Street analysts’ responses to the two companies. While both suffered losses, analysts had a much more bullish response to Amazon. The market agreed, with Amazon’s stock price rising 12% in after-hours trading the day the company announced its results. Shopify’s stock price tumbled amidst analyst criticism, although it has since recovered.<br /> </p> <p>Amazon has strengths that Shopify lacks. Amazon is much bigger than Shopify and can better cope with quarterly losses. Amazon’s Q2 2022 revenue was $121.2 billion, while Shopify’s was $1.3 billion. Amazon’s market cap is $1.4 trillion, roughly 3.3 times larger than Shopify’s $44.2 billion. Amazon predicted better results for the balance of 2022, while Shopify anticipated continuing losses.</p> <div id="everviz-layout-DcHXpfQm4"><script src="https://app.everviz.com/inject/DcHXpfQm4/" defer="defer"></script></div> <p>Furthermore, Amazon is diversified with services such as AWS, while Shopify relies entirely on ecommerce. Moreover, Amazon is pursuing healthcare initiatives. In July, the company announced plans to buy One Medical, a primary care provider with nearly 200 U.S. locations. Additionally, through Amazon Care, the company offers virtual consultations with doctors.</p> </div> <div class="post-footer"> <div class="article-sharing"> <p class="sharing-label">Share this article:</p> <div class="article-sharing-link"> <input class="shortened-url" name="shortened-url" title="Shortened URL" value="https://pec-ly.com/?6kbE" type="text"></li> <a title="Copy URL" rel="nofollow" class="copy-pec-link" onclick="ga('send', 'event','Article Top','Copy');" data-link="https://pec-ly.com/?6kbE"><img src="https://www.practicalecommerce.com/wp-content/themes/pec/images/copy-link-icon.png" width="32" height="32" alt="Copy share link" loading="lazy" /><div class="copy-alert" style="display: none;">Link copied</div></a> </div> </div> <div class="post-navigation"> <span class="prev-link"> <a href="https://www.practicalecommerce.com/editorial-newsletters-are-the-new-blogs" rel="prev" onclick="ga('send', 'event','Previous/Next','Previous');" data-wpel-link="internal"> <span 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