Amazon.com, Inc. (NASDAQ: AMZN) reported robust financial results for its second quarter, which ended on June 30, 2023. The company’s net sales saw an impressive 11% increase, reaching $134.4 billion compared to $121.2 billion in the second quarter of 2022. Notably, this growth factor remained the same after excluding the $0.3 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter.
Segmental Performance Highlights
- North America segment sales surged 11% year-over-year to $82.5 billion.
- International segment sales also experienced a healthy growth, increasing 10% year-over-year to $29.7 billion.
- Amazon Web Services (AWS), the company’s cloud computing division, posted a 12% increase in sales year-over-year, totaling $22.1 billion.
From an operating income perspective, Amazon reported an increase to $7.7 billion in the second quarter, more than double the $3.3 billion reported in the second quarter of 2022. Notably, Amazon’s North America segment reported an operating income of $3.2 billion, a significant improvement compared to the operating loss of $0.6 billion reported in the second quarter of 2022.
The International segment, though still reporting an operating loss, showed improvement with a loss of $0.9 billion, compared to a larger loss of $1.8 billion in the second quarter of 2022. However, AWS experienced a slight decrease in its operating income, reporting $5.4 billion compared to $5.7 billion in the second quarter of 2022.
The company reported a net income of $6.7 billion, or $0.65 per diluted share, in the second quarter, a significant turnaround from the net loss of $2.0 billion, or $0.20 per diluted share, in the second quarter of 2022.
Other Financial Indicators
The second quarter of 2023 also saw a pre-tax valuation gain of $0.2 billion from the company’s common stock investment in Rivian Automotive, Inc., a stark contrast to the pre-tax valuation loss of $3.9 billion from the investment in the second quarter of 2022.
Amazon reported a substantial increase in operating cash flow, which surged 74% to $61.8 billion for the trailing twelve months, compared with $35.6 billion for the trailing twelve months ended June 30, 2022. Furthermore, free cash flow improved to an inflow of $7.9 billion for the trailing twelve months, marking a significant improvement from an outflow of $23.5 billion for the trailing twelve months ended June 30, 2022.
Management Remarks
Amazon CEO Andy Jassy stated, “It was another strong quarter of progress for Amazon,” emphasizing the company’s continued efforts in reducing the cost to serve in its fulfillment network and providing Prime customers with record-breaking delivery speeds. He also noted the strong demand for Amazon’s advertising services and the continued leadership of AWS in the cloud sector.
Market Reaction
Following the earnings release, Amazon’s stock rose more than 10% in extended trading. The company expects sales of between $138 billion and $143 billion, or growth of between 9% and 13%, for the third quarter, aligning with analysts’ expectations. Amazon’s return to double-digit growth after a period of single-digit expansion in five of the past six quarters was well received by the market.
