Amazon Q2 2022 Earnings

Revenue: $121.234 billion

Net loss: $2.028 billion

Operating loss in North America: $627 million

Net advertising revenue: $8.757 billion

Amazon reported its fiscal 2022 second-quarter earnings. The financial report shows that the net loss in the second quarter was 2.028 billion US dollars, and the net profit in the same period last year was 7.778 billion US dollars; the second quarter sales were 121.2 billion US dollars, an increase of 7.2% over the same period last year. Amazon posted two consecutive quarters of losses and its slowest sales growth in 20 years.

Among them, the North American market, which is the core of retail, had an operating loss of US$627 million, compared with an operating profit of US$3.147 billion in the same period last year. The division recorded its third consecutive operating loss.

In terms of revenue, Amazon’s net sales in the second quarter were $ 121.234 billion, a year-on-year increase of 7.2% , higher than market expectations of $ 119.1 billion.

E-commerce sales drop as consumers return to offline

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Amazon's core e-commerce business has struggled with high costs and low demand. Sales in Amazon's e-commerce unit fell 4% in the second quarter as consumers returned to in-store shopping. Notably, sales of Amazon's logistics and other services to third-party sellers rose 9% in the second quarter, a slight acceleration from earlier this year.

Amazon slows down expansion, capital no longer favors retail business

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Amazon says surging inflation is one of the company's biggest challenges right now. Amazon has slowed its business expansion plans into next year and plans to shift capital spending toward cloud computing rather than the company's retail business.

To keep costs in check, Amazon has had to make adjustments to its network of warehouses, sorting centers and other expensive infrastructure. Amazon said it is working hard to sublease millions of square feet of excess warehouse space, delay construction of new facilities and seek to terminate or renegotiate leases with outside warehouse owners.

Meanwhile, Amazon will slow its hiring plans this year due to inflation and macroeconomic uncertainty. Amazon's chief financial officer said hiring for engineers, cloud computing and advertising units continued. The number of Amazon employees fell 6% in the second quarter to 1.52 million.

Advertising business is a highlight

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In the second quarter, Amazon's advertising revenue rose 18% year-on-year to $ 8.8 billion. In contrast, Google's advertising revenue in the quarter increased by 11.59% year-on-year , and Facebook's parent company Meta 's advertising revenue fell 1.5% year-on-year in the quarter .

Losses mainly come from investment in Rivian

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Since January this year , Rivian's stock price has plummeted, and its valuation has continued to evaporate. Amazon’s investment in Rivian lost $ 7.6 billion in the first quarter and $ 3.9 billion in the current quarter, for a combined loss of $ 11.5 billion in the two quarters.

Prime membership fees continue to rise

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During its fourth-quarter 2021 earnings call, Amazon first announced an increase in Prime membership prices in the U.S. market. Before the release of this quarter’s earnings, Amazon announced that it will raise the annual Prime membership price in the European market by 20% to 43% from September 15 .

Amazon expects net sales to reach between $ 125 billion and $ 130 billion in the third quarter of fiscal 2022 , an increase of 13% to 17% year-over-year ; Operating profit was $ 4.9 billion.

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