Amazon’s Q2 Earnings: Revenue Growth Overshadowed by Widening Losses
Amazon reported mixed second-quarter financial results after market close today, with revenue meeting analyst expectations but losses exceeding projections. The e-commerce giant posted $19.34 billion in revenue alongside a $0.27 per-share loss—nearly double Wall Street’s anticipated $0.15 loss.
Key Financial Highlights
- 23% YoY revenue growth (vs. Q2 2013)
- Operating income: -\(17M (down from \)79M YoY)
- Net loss: \(126M (vs. \)7M loss YoY)
- Cash reserves: $5B+
Investors reacted swiftly, sending Amazon’s stock down 5% in after-hours trading. The company’s cyclical business model—which typically sees stronger Q4 performance—and aggressive growth investments contributed to the shortfall.
Behind the Numbers: Spending Growth Outpaces Revenue
Amazon attributed its widening losses to:
- Expanded hiring: AWS added “thousands of employees”
- Total workforce: 132,000+ (surpassing Microsoft post-Nokia acquisition)
- Fire Phone impact: App submissions to Amazon Appstore doubled post-launch
Services Segment Shows Strength
The “Services” category grew 38.5% YoY to \(4.09B, while AWS revenue (categorized under "Other") reached **\)1.19B**—still a small fraction of total sales.
Concerning Q3 Guidance
Amazon forecasts:
- Revenue: \(19.7B–\)21.5B
- Operating loss: \(410M–\)810M (vs. $25M loss YoY)
The projected deficit includes $410M in stock-based compensation and intangible asset amortization. This outlook suggests Amazon’s high-growth, low-margin strategy will continue pressuring profitability in the near term.
Market Reaction and Analysis
While Amazon traditionally prioritizes revenue expansion over profits, investors showed limited tolerance for the larger-than-expected loss without corresponding revenue outperformance. The earnings miss highlights ongoing challenges in balancing growth initiatives with shareholder expectations.
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