Amazon General Electric Co. reported weaker-than-expected second-quarter revenue on Thursday and issued a disappointing outlook for the current period. Shares fell about 6% in extended trading.
This is what the company did:
Earnings: $1.26 per share vs. $1.03 per share expected by LSEGR Revenue: $147.98 billion vs. $148.56 billion expected by LSEG
Wall Street is also looking at these key numbers:
Amazon Web Services: $26.3 billion vs. $26 billion in revenue, according to StreetAccount. Advertising: $12.8 billion vs. $13 billion in revenue, according to StreetAccount.
Amazon forecast revenue for the current quarter to come in between $154 billion and $158.5 billion, representing growth of 8% to 11% year over year. The midpoint of that range was $156.25 billion, below analysts’ average estimate of $158.24 billion, according to LSEG.
Amazon continues to grapple with slow growth in its core retail business, with competition intensifying, largely from discount sites like Timo and Shein, which allow Chinese merchants to sell cheap goods to American consumers.
The company’s e-commerce sales grew just 5% year over year. Revenue from third-party seller services, which includes commissions and shipping fees, accelerated even faster, growing 12% during the quarter.
“We missed revenue growth in North America a little bit compared to our internal estimates,” Chief Financial Officer Brian Olsavsky told reporters on a call after the report.
Olsavsky said the revenue decline was driven by consumers choosing to buy cheaper products, which led to a decline in the average selling price.
“What we’re seeing is really about the average selling price and the lower average selling price in the products that customers are choosing,” Olsavsky said. “They continue to be cautious with their spending and shift to products with a lower average selling price.”
At an event with Chinese sellers in June, Amazon said it plans to launch a discount store that will mostly carry non-branded items priced under $20, according to a presentation seen by CNBC. The store is expected to offer clothing, home goods and other products.
Amazon expects third-quarter operating income to be between $11.5 billion and $15 billion, compared with $11.2 billion in the year-ago period. Analysts surveyed by StreetAccount had expected operating income of $15.3 billion.
In cloud computing, AWS beat estimates, growing 19% year over year, but the unit is expanding at a slower rate than rivals. Microsoft And GoogleBoth companies reported 29% cloud computing growth in their respective earnings reports, though their numbers don't include just cloud infrastructure.
Amazon’s advertising revenue rose 20% to $12.77 billion during the quarter, slightly below estimates. The unit has emerged as one of its biggest revenue generators, and while most of its ad sales still come from sponsored product listings on its online store, the company has added new offerings and increased its market share in the digital advertising segment, where it competes with Meta And the alphabet.
Among online advertising companies, Meta had the strongest quarter, reporting 22% revenue growth. Google’s advertising business grew just 11% during the quarter. pop The company said Thursday that revenue increased 16% compared to the previous year.
Amazon's net income doubled from a year earlier to $13.5 billion, or $1.26 a share, from $6.75 billion, or 65 cents a share, reflecting comprehensive cost-cutting efforts across the company.
Olsavsky said the company attributed part of the weakness in its guidance to consumers being distracted by global events, which made the “third quarter difficult to predict.” He highlighted the Olympic Games that began last month in Paris and the attempted assassination of Donald Trump at a rally in July.
“No matter what you sell or what you offer to your customer base, customers only get a limited amount of attention, and things like the Olympics, even though they don’t happen very often, we see different patterns of traffic around those events,” Olsavsky says. “When there’s a high-profile event or an assassination attempt two weeks ago, you see people shift their attention around the news.”
Disclosure: NBCUniversal, the parent company of CNBC, owns NBC Sports and NBC Olympics. NBC Olympics holds the U.S. broadcast rights to all Summer and Winter Games through 2032.
This story is under development. Stay tuned for updates.
