🔒 Another ‘unusually high’ quarter for Amazon – BizNews Share Portfolio

Amazon.com, Inc. announced its financial results for its second quarter ended June 30, 2020 on Thursday. “This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” said Jeff Bezos, Amazon founder and CEO. In September 2018, Forbes described him as “far richer than anyone else on the planet” as he added $1.8 billion to his net worth when Amazon became the second company in history to reach a market cap of $1 trillion. Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Amazon is in the BizNews share portfolio. BizNews founder and editor-in-chief, Alec Hogg, hosts an exclusive monthly share portfolio update for BizNews Premium members. – Nadya Swart

Amazon.com announces second quarter results

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SEATTLE–(BUSINESS WIRE)–Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its second quarter ended June 30, 2020.

  • Operating cash flow increased 42% to $51.2 billion for the trailing twelve months, compared with $36.0 billion for the trailing twelve months ended June 30, 2019.
  • Free cash flow increased to $31.9 billion for the trailing twelve months, compared with $25.0 billion for the trailing twelve months ended June 30, 2019.
  • Free cash flow less principal repayments of finance leases and financing obligations increased to $21.3 billion for the trailing twelve months, compared with $16.1 billion for the trailing twelve months ended June 30, 2019.
  • Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations increased to $19.4 billion for the trailing twelve months, compared with $13.0 billion for the trailing twelve months ended June 30, 2019.
  • Common shares outstanding plus shares underlying stock-based awards totalled 517 million on June 30, 2020, compared with 510 million one year ago.
  • Net sales increased 40% to $88.9 billion in the second quarter, compared with $63.4 billion in second quarter 2019. Excluding the $582 million unfavourable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 41% compared with second quarter 2019.
  • Operating income increased to $5.8 billion in the second quarter, compared with operating income of $3.1 billion in second quarter 2019.
  • Net income increased to $5.2 billion in the second quarter, or $10.30 per diluted share, compared with net income of $2.6 billion, or $5.22 per diluted share, in second quarter 2019.

“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” said Jeff Bezos, Amazon founder and CEO. “As expected, we spent over $4 billion on incremental Covid-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners. We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales. Lastly, even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9 billion in capital projects, including fulfillment, transportation, and AWS.”

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of July 30, 2020, and are subject to substantial uncertainty. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and customer spending, world events, the rate of growth of the Internet, online commerce, and cloud services, and the various factors detailed below.

This guidance reflects our estimates as of July 30, 2020 regarding the impact of the COVID-19 pandemic on our operations, including those discussed above, and is highly dependent on numerous factors that we may not be able to predict or control, including: the duration and scope of the pandemic, including any recurrence; actions taken by governments, businesses, and individuals in response to the pandemic; the impact of the pandemic on global and regional economies and economic activity, workforce staffing and productivity, and our significant and continuing spending on employee safety measures; our ability to continue operations in affected areas; and consumer demand and spending patterns, as well as the effects on suppliers, creditors, and third-party sellers, all of which are uncertain. This guidance also assumes the impacts on consumer demand and spending patterns, including impacts due to concerns over the current economic outlook, will be in line with those experienced during the third quarter to date, and the additional assumptions set forth below. However, it is not possible to determine the ultimate impact on our operations for the third quarter, or whether other currently unanticipated direct or indirect consequences of the pandemic are reasonably likely to materially affect our operations.

Third Quarter 2020 Guidance

  • Net sales are expected to be between $87.0 billion and $93.0 billion, or to grow between 24% and 33% compared with third quarter 2019. This guidance anticipates an unfavourable impact of approximately 20 basis points from foreign exchange rates.
  • Operating income is expected to be between $2.0 billion and $5.0 billion, compared with $3.2 billion in third quarter 2019. This guidance assumes more than $2.0 billion of costs related to COVID-19.
  • This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.

A conference call will be webcast live today at 2:30 p.m. PT/5:30 p.m. ET, and will be available for at least three months at amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

About Amazon

Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalised recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon. For more information, visit amazon.com/about and follow @AmazonNews.

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