August 9th, 2020

               

Amazon reported earnings for Q2 2020 on July 30th.To no one’s surprise, Amazon has had a big quarter. Here are a few key highlights:

Net Sales Up 40%, Net income up 100%. 

Amazon reported net sales are up 40%, on the guidance of 18% to 28%. Net income is up 100% from $2.6B to $5.2B. This is despite an increase in various expenses related to COVID.  The online grocery category grew by 300%.

For the first time, the international segment showed an operating profit. 

International Operating Income

Advertising revenue grew by 41% in Q2

Advertising revenue continues to grow and is up 41%. Note that ad revenue only grew by 8% over Q1 2020, while retail sales grew by 25%. This could be in part because of restrictions on non-essential categories imposed in March and April. 

Advertising Growth

Note: Advertising revenue is reported under the “Other” line item in the quarterly filings. “Other” includes sales of advertising services, as well as sales related to our other service offerings. 

 

Q2 vs Q1 Growth

 

Online Stores, 3P Services the primary growth driver

Growth Rate By Segments

While AWS and advertising growth rates in Q2 were largely in line with Q1, Online stores, and 3P Seller Services have shown a dramatic increase and topped the list. AWS and advertising had been leading the pack so far.

Q3 Guidance: 28% to 34% growth

Q3- 2020 sales growth guidance is between 28% and 34%. Increases in COVID cases and retail bankruptcies will continue to fuel this growth. Below is a summary of guidance and actuals for the past few quarters.

Guidance Vs Actuals

 

Looking ahead, we should expect another huge quarter in Q3 based on this guidance. Amazon has expanded work-force and capacity significantly to handle this growth. This should help address the fulfillment and sourcing challenges they faced in Q2.

While the Amazon story is positive, as we all know, the macroeconomic story is not. We are faced with a contracting GDP and record unemployment rates. While stimulus packages can provide short-term relief, we collectively have to tame this virus or find a vaccine to get back to normal. At Intentwise, we sincerely hope that we make real progress on both these fronts in the coming days.

 

 

Here are highlights of the prior quarter:  Amazon Q1 2020 Earnings


About Intentwise:

Intentwise is a Chicago-based technology company that helps brands, sellers, and agencies maximize returns from Amazon advertising spend. Intentwise’s industry-leading SaaS platform provides impactful recommendations and automation to accelerate advertising optimization while saving valuable time for advertisers.

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