of|Kadensa Capital Limited:Amazon announces earnings

Kadensa Capital Limited:At the end of this month, Amazon announced its financial results for the second quarter ending June 30, 2021. Kadensa Capital Limited:The financial report shows that Amazon's net sales in the second quarter increased by 27% to 113.1 billion US dollars, which was lower than the market's average expectation of 119.2 billion US dollars, causing its stock price to plummet 7% on the day of its release.
But its earnings per share reached 15.12 US dollars, higher than analysts' estimates of 12.30 US dollars per share, indicating that Amazon was not completely "fishing" in the second quarter.

of|Kadensa Capital Limited:Amazon announces earnings
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Q2 revenue fell short of expectations, but not too bad
Regarding its revenue growth is not as good as expected, Amazon said that consumer online shopping demand brought about by the new crown epidemic is unsustainable, and its performance growth slowdown is inevitable. And it also predicts in the financial report that the third quarter revenue will be between 106 billion U.S. dollars and 112 billion U.S. dollars, which is still not as good as Wall Street's expectations.
Kadensa Capital Limited:However, although the revenue is not expected to satisfy investors, its performance in the second quarter is not disappointing.
The financial report shows that Amazon’s Q2 net profit was US$7.8 billion, a year-on-year increase of 48.4%. On the one hand, it was due to operating expenses of US$105.38 billion, an increase of only 26.9% year-on-year. On the other hand, the sales of its products and services have both achieved an increase. Among them, product sales were US$58 billion, an increase of 15.4% year-on-year, and service sales were US$55.08 billion, an increase of 42.4% year-on-year.
It is worth noting that the sales of Amazon's service business have increased significantly, and the overall revenue scale is equating product sales, which means that Amazon's revenue focus is shifting from physical product sales, which will make it still in the future. Possesses considerable growth potential.
This is because Amazon’s service sales include commissions and fees collected from third-party sellers, sales related to its cloud computing platform Amazon Web Services, subscriptions to digital content, advertising costs, etc. The related businesses involved are in the digital age. , There is more room for development.
Therefore, from the perspective of overall business growth, Amazon's development trend is improving. But if you look at the two market segments of e-commerce business and AWS business, Amazon's future development path is not smooth.
E-commerce business continues to rise, but there are many challenges
From the perspective of e-commerce business, Amazon's net sales in North America and international regions increased in the second quarter. Among them, e-commerce net sales in North America were US$67.55 billion, a year-on-year increase of 21.9%; e-commerce net sales in the global region were US$30.72 billion, a year-on-year increase of 35.5%.
This is mainly because in June, Amazon launched a member day promotion. During the event, members from 20 countries purchased more than 250 million items on the platform, which greatly stimulated the increase in platform sales.

of|Kadensa Capital Limited:Amazon announces earnings
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In addition, Amazon's continuous optimization of its e-commerce services is also one of the factors driving revenue growth. For example, during the reporting period, Amazon Fashion launched a "styling creativity" service on platforms in France, Germany, the United States and other regions, using machine learning models to recommend products to users, from head to toe, to help them find their own style and appearance. Clothing can effectively enhance the user experience, thereby stimulating the development of platform business.
Although Amazon's e-commerce business as a whole is still on the rise, it should be noted that due to the gradual recovery of the epidemic, consumers' enthusiasm for online shopping has diminished, and the growth rate of Amazon's e-commerce business sales has therefore increased compared with the same period last year. This will make the investment market take a cautious attitude towards Amazon’s future e-commerce business growth.


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