Amazon Sales Growth Recedes in Q2 – Advertising Sales Reach Nearly $8 Billion

Andy Jassy

On the heels of Jeff Bezos stepping down as CEO earlier this month, Amazon announced Q2 earnings that saw the e-commerce giant post $113.1 billion in revenue − an increase of 27% from the Q2 last year but falling short of the $115.2 billion analysts had expected.

Q2 also marked a slowdown from the 40% sales growth Amazon posted during the same period in 2020. This despite the company’s big selling Prime Day which took place during the June quarter this year.
Amazon additionally said that it is expecting weaker sales growth in the upcoming quarter, forecasting that net sales will increase between 10% and 16% from the prior year − which would be a significant drop from the 37% sales growth it reported in the third quarter of 2020.

Amazon’s advertising business continues to grow rapidly and is now one of the company’s key revenue streams. In the company’s Q2 2021 earnings report, Amazon said its “Other” category, which is primarily made up of advertising along with sales-related to other service offerings, generated $7.9 billion in sales. That marks up an 87% rise from a year ago, and up 14% from the first quarter of 2021.

 
 

“Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE, food, and other products that helped communities around the world cope with the difficult circumstances of the pandemic,” said newly-appointed said Andy Jassy, Amazon CEO.

“At the same time, AWS has helped so many businesses and governments maintain business continuity, and we’ve seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud.”

Amazon 2021 Q2 Financial Highlights

  • Operating cash flow increased 16% to $59.3 billion for the trailing twelve months, compared with $51.2 billion for the trailing twelve months ended June 30, 2020.
  • Free cash flow decreased to $12.1 billion for the trailing twelve months, compared with $31.9 billion for the trailing twelve months ended June 30, 2020.
  • Free cash flow less principal repayments of finance leases and financing obligations decreased to $0.6 billion for the trailing twelve months, compared with $21.3 billion for the trailing twelve months ended June 30, 2020.
  • Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations decreased to $4.2 billion for the trailing twelve months, compared with $19.4 billion for the trailing twelve months ended June 30, 2020.
  • Common shares outstanding plus shares underlying stock-based awards totaled 522 million on June 30, 2021, compared with 517 million one year ago.
  • Net sales increased 27% to $113.1 billion in the second quarter, compared with $88.9 billion in second quarter 2020. Excluding the $2.5 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 24% compared with second quarter 2020.
  • Operating income increased to $7.7 billion in the second quarter, compared with $5.8 billion in second quarter 2020.
  • Net income increased to $7.8 billion in the second quarter, or $15.12 per diluted share, compared with $5.2 billion, or $10.30 per diluted share, in second quarter 2020.

Andy Jassy, the longtime head of Amazon’s cloud computing division, replaced Bezos as CEO.

 
 

Related