/‘If you’re a shareholder, you may want to sit down’ — Amazon reports earnings, plans to spend all Q2 profits on coronavirus response

‘If you’re a shareholder, you may want to sit down’ — Amazon reports earnings, plans to spend all Q2 profits on coronavirus response

Amazon reported its first-quarter earnings after the bell on Thursday, revealing the pandemic’s impact on the business that has been a rare bright spot on the stock market. The stock fell more than 5% after hours after missing estimates on earnings while beating revenue expectations.

Here’s what Amazon reported:

  • Earnings per share (EPS): $ 5.01
  • Revenue: $ 75.45 billion
  • Amazon Web Services (AWS) revenue: $ 10.22 billion 

Wall Street had been anticipating earnings per share of $ 6.25 on revenue of $ 73.61 billion, based on Refinitiv consensus estimates. Amazon Web Services revenue was expected to come in at $ 10.33 billion, based on FactSet estimates. However, it’s difficult to compare reported earnings to analyst estimates for Amazon’s first quarter, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.

Amazon said it expects to spend its entire $ 4 billion operating profit in Q2 on coronavirus-related expenses.

“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Amazon said in the press release. “Under normal circumstances, in this coming Q2, we’d expect to make some $ 4 billion or more in operating profit. But these aren’t normal circumstances.”

This marked the first quarter AWS revenue topped $ 10 billion. More organizations have relied on cloud services like Amazon’s during stay at home orders to cope with the pandemic. AWS helped the NFL stream its virtual draft.

For the second quarter, Amazon said it expects net sales to come in between $ 75 billion and $ 81 billion, representing year-over-year growth between 18% and 28%. The company anticipates a range of an operating loss of $ 1.5 billion to an operating income of $ 1.5 billion based on its expectation of spending $ 4 billion on coronavirus-related costs. That compares to its operating income of $ 3.1 billion during the same quarter last year.

Much of Amazon’s earnings release centered on its response to the coronavirus pandemic. Amazon addressed how it is helping employees stay safe with measures like procuring 100 million face masks and increased pay for hourly employees. The company has faced significant push-back from warehouse employees who have complained of unsafe conditions and inadequate benefits as their jobs have been deemed essential.

Amazon also talked about how it is servicing customers during the pandemic by prioritizing stocking essential goods like household staples and medical supplies. Amazon said it’s suspended more than 10,000 sellers from its platform for violating policies against price gouging. It’s also working to expand capacity for food-related delivery and pick-up services like Amazon Fresh and Whole Foods.

Amazon also highlighted organizations using AWS to run their own coronavirus responses and info-gathering, including the World Health Organization and schools around the world.

This story is developing. Check back for updates.

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