Tech major Amazon reported slowing sales and a net loss for the second-consecutive quarter, but its revenue topped Wall Street expectations. Revenue for the tech giant in this period increased by 7.2% to $121.2 billion, from its previous year. That was a tad slower than the 7.3% rise in the first quarter at $119 billion, which had marked Amazon’s slowest growth in about two decades.
The Seattle-based e-commerce giant’s loss totalled $2 billion in the quarter, compared with a profit of $7.8 billion a year ago. The loss came partly because of the company’s stake in electric-vehicle maker Rivian Automotive Inc., whose valuation has plunged this year, causing Amazon to book a pretax loss of $3.9 billion in the second quarter, the company said in its quarterly filing. However, its pretax loss from Rivian in this quarter narrowing from the $7.6 billion hit, it reported in the prior period. Amazon in the fourth quarter of 2021 had registered a $12 billion gain from the investment in the auto maker, which went public last year.
Also, Amazon’s core e-commerce business has been struggling with slowing growth in demand as customers return to in-store shopping. Amazon’s online stores experienced a 4% decline in sales for the period. Amazon said revenue would have been flat in the segment if not for the impact of the stronger US dollar, which reduces the value of overseas revenue.
Meanwhile, the cloud-computing and advertising businesses which have been reliable growth engines for Amazon, continue to be optimistic. Revenue for Amazon Web Services (AWS), the largest cloud-computing company by market share, grew 33% to $19.7 billion in the second quarter. Amazon’s advertising business also grew 18% to $8.8 billion in the quarter.
“Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network,” Amazon Chief Executive Andy Jassy said.
Amazon’s number of employees—which had more than doubled during the pandemic—dipped about 6% during the second quarter to 1.52 million.
Like other tech companies, Amazon is rethinking its hiring due to inflation and the economic environment, Brian Olsavsky, Amazon’s chief financial officer mentioned that the “company will not be hiring at the same pace we did in the last year or the last few years,” but added that it is “still committed to hiring engineering positions, and in its cloud-computing and advertising divisions”.
The company said that it expects its operating income for the third quarter to be not more than $3.5 billion, compared with $4.9 billion in third quarter 2021. It expects sales between $125 billion and $130 billion.
Not just Amazon, other US tech majors have reported a slowdown in growth in the latest quarter amid rising interest rates, inflation and recession fears.
Tech giant Apple on Thursday revealed its third quarter results, which narrowly beat market expectations for sales and profit. Apple's revenue rose by 2% during the quarter, which is sluggish compared to last year's 36% growth during the same period last year, with investors concerned about a smartphone slowdown analysts signalled a slowing demand for smartphones and PC as consumers face recession and high inflation and a strong dollar.
On Wednesday, Meta, the parent company of Facebook and Instagram reported its first-ever revenue decline and predicted a dip in revenue for the next quarter. The social media giant, whose social media platforms are dependent on advertising, said that its ad sales were hurt as businesses are cautious to spend on advertising due to economic instability since the war in Ukraine.
Earlier this week, Google’s parent company Alphabet reported weaker-than-expected earnings and revenue for the second quarter to 13% from 62% a year earlier. Meanwhile, Microsoft reported a profit of $16.7 billion on revenue of $51.9 billion for the quarter - its slowest revenue growth since 2020.