Amazon doubles its Q2 profits to $5.2 billion thanks to huge spending during COVID-19 lockdowns.
Amazon just reported its Q2'20 profits for the quarter ended June 30, 2020, and the results are astronomical. The retail titan generated $5.2 billion in Q2 profits on $88.9 billion in net sales revenues due to exceptionally high demand in deliveries and shipments from April onwards. North America made up 62% of total net revenues during the period, generating $55 billion in revenues. That's more than double the international sales, which raked in $22.6 billion.
Amazon spends almost as much as it makes, though. The company reported only $2.1 billion of operating income on $55 billion in North American geographical revenues. Altogether, Amazon spent over $83 billion on operating expenses including facilities management and more.
"Our consolidated revenue and operating income significantly exceeded the top end of our guidance range. Strong top line performance was driven by increased consumer demand, led by Prime members," said Amazon CFO Brian Olsavsky.
"We continue to see high Prime member engagement throughout the quarter. Prime members shop more often with larger basket sizes. Worldwide streaming video hours doubled year-over-year driven largely by Prime video. We're reaching more customers with our grocery offerings.
"Online grocery sales tripled year-over-year. Existing Prime member renewal rates improved, and the Prime member growth rate accelerated both in the U.S. and worldwide."
Amazon Q2'20 Earnings At-A-Glance
- Net Sales - $88.912 billion, up 40% YoY
- Operating Income - $5.843 billion, up 89% YoY
- Net Income -$5.243 billion, up 100% YoY
- Expenses - $83.06 billion, up 37.7%
Amazon's trailing-twelve months earnings--which combines all revenues from the last 4 quarters including Q3'19 through Q2'20--amounts to a mighty $321.78 billion, which is more than the total yearly GDP of most countries.
Amazon Web Services revenue made up 12% of total net sales revenues for the quarter, or $10.8 billion, up 29% from Q2'19.
Olsavsky also revealed that Amazon is simply running out of space for inventory to keep up with the demand. The company plans to expand its facility square-footage by 50% in 2020. Most of this extra space will be available in Q3 and materially impact Q3-Q4 revenues.
"Now as we move into Q3, we're starting to - we need to build the inventory more for Q4, and we've run out of space," Olsavsky said.
"In 2019, we increased network square footage by approximately 15%. This year, we expect a meaningfully higher year-over-year square footage growth of approximately 50%. This includes strong growth in new fulfillment center space as well as sort centers and delivery stations. We expect the majority of this capacity to come online in late Q3 and into Q4."
- > NEXT STORY: EA's newly available PC games conquer Steam charts
- < PREVIOUS STORY: PlayStation 5 Pro with multi-GPU tech outlined in new Sony patent