Amazon Soars on the Wings of COVID

Amazon (NASDAQ: AMZN) recently reported its quarterly results that continued to outpace market expectations. The company is seeing strong growth in both e-commerce and cloud businesses due to global lockdown and virtual working conditions.

Amazon’s Financials

Amazon recently reported its second quarter results where revenues grew 40% to $88.91 billion, ahead of the market’s forecast of $81.56 billion as consumers shopped significantly higher than expected. Net income of $10.30 per share was much higher than the Street’s forecast of $1.74 per share.

By segment, net product sales grew 40% from $35.9 billion last year to $50.2 billion and net service sales increased 41% from $27.5 billion to $38.7 billion.

North American sales grew 43% to $55.4 billion, while international sales grew 39% to $22.7 billion.

Revenues from Amazon Web Services (AWS) increased 29% to $10.8 billion. Subscription services revenues grew 28% to $6.02 billion. Revenues from “other” category which primarily includes advertising grew 41% to $4.22 billion.

Amazon expects its third quarter revenues at $87-$93 billion with an operating income of $2-$5 billion. It did not provide any guidance for the year. The market was looking for revenues of $92 billion for the quarter with a net income of $7.24 for the quarter.

Amazon’s International Focus

In response to the COVID crisis, Amazon has focused a large portion of their attention to helping the SMB segment globally. In the UK, in partnership with the British small business network Enterprise Nation, Amazon launched Amazon Small Business Accelerator. The Accelerator will help support over 200,000 small businesses that have been negatively affected by the recent COVID situation. It hosted a week long session in the UK to help 1,000 businesses transition to online networks. It additionally offered free services, as well as AWS credits, training, and support to these organizations.

In Asia, it is focusing on Japan and India. For Japan, it launched Global Selling, allowing Japanese sellers to reach customers from 16 other Amazon sites. Similar to Google, Amazon is also investing heavily in India. It announced plans to help small, macro, and medium sized businesses as part of its $1 billion investment program. It launched Local Shops on Amazon.in, which enables shopkeepers owning physical stores to expand and serve more customers locally. Over 11,000 sellers have registered in this program since its launch. In addition to Local Shops, Amazon has included Hindi as one of the languages on its seller registration and management services, helping these India-based companies overcome the language barrier. It has been reported that since this addition, over 10,000 sellers have used Hindi to register on Amazon.

Amazon’s Cloud Business

Besides international markets, Amazon remains committed to AWS, adding significant features to the service during the quarter. It announced Amazon Honeycode, a fully-managed service that will allow customers to quickly build mobile and web applications without requiring any programming language capabilities. It announced the general availability of AWS Snowcone, a small, secure edge computing and data transfer device that enables customers to collect data, process it locally, and move it to AWS. It also announced the general availability of AWS IoT SiteWise, a managed service that collects data from the plant floor, structures and labels the data, and generates real-time key performance indicators and metrics to help customers make better data-driven decisions.

Continuing to help the developers, it announced the general availability of Amazon CodeGuru, a developer-quality service that is powered by machine learning to provide intelligent recommendations for improving code quality. Other services released include UltraWarm for Amazon Elasticsearch Service – a low-cost warm storage tier and Amazon Kendra, an enterprise search service powered by machine learning.

AWS is also expanding its partnerships and announced a tie-up with Slack to deliver enterprise workforce collaboration services. As part of the agreement, Slack will migrate its Slack Calls capability for voice and video calling to Amazon Chime. Slack will also leverage AWS to support enterprise customers’ adoption of its platform.

Last week, it also entered into a partnership with India’s Bharti Airtel, the third-largest telecom operator in the country, to sell AWS offerings under the Airtel Cloud brand to small, medium, and large-sized businesses in the country. The deal will help AWS expand its presence in India.

Its stock is trading at $3,167.46 with a market capitalization of $1.58 trillion. It had touched a 52-week high of $3,344.29 in early July. It had fallen to a 52-week low of $1,626.03 in September last year.

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