Amazon (AMZN) earnings for the second quarter of 2022

Amazon shares rose more than 13% in extended trading Thursday after the company reported better-than-expected second-quarter revenue and gave an optimistic outlook.

Here’s how the company did:

  • EPS: Losing 20 cents
  • he won: $121.23 billion vs. $119.09 billion expected, according to Refinitiv

Here’s how other key Amazon segments performed during the quarter:

  • Amazon Web Services: $19.7 billion vs. Expected to be $19.56 billion, according to StreetAccount
  • Advertising: $8.76 billion vs. Expected to be $8.65 billion, according to StreetAccount

Revenue growth of 7% in the second quarter beat estimates, defying the trend among its big tech peers, which all reported disappointing results before Thursday. Apple, along with Amazon, exceeded expectations.

Amazon said it expects third-quarter revenue to be between $125 billion and $130 billion, representing growth of 13% to 17%. Analysts had expected sales of $126.4 billion, according to Refinitiv.

Amazon was dealing with rising costs, as pandemic-driven expansion left the company with too many workers and too much storage capacity.

“Despite continued inflationary pressures in fuel, energy and transportation costs, we are making progress on the more manageable costs we flagged in the last quarter, particularly improving the productivity of our fulfillment network,” CEO Andy Gacy said in a statement.

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Amazon reduced its number of employees from 99,000 people to 1.52 million by the end of the second quarter after it nearly doubled in size during the pandemic.

Tech companies have announced layoffs, hiring freezes and canceling job offers amid economic uncertainty. On a call with reporters, Chief Financial Officer Brian Olsavsky said Amazon would continue to hire engineers for units like Amazon Web Services and advertising, but would be cautious about hiring in other regions.

“I think it’s only right that people step back and question their hiring plans,” Olsavsky said. “We’re doing it too. I don’t think you’ll see us hiring as quickly as we’ve done over the last year, or the last few years.”

Amazon posted a $3.9 billion loss on its investment in Rivian after shares of the electric car maker plunged 49% in the second quarter. This brings his total investment loss this year to $11.5 billion.

Due to Rivian’s write-off, Amazon incurred a total loss of $2 billion in the quarter. Analysts’ EPS estimates have varied widely, making it difficult to compare actual results to an agreed-upon number.

Rivian CEO RJ Scaringe and Udit Madan pose in front of the new Amazon EV powered by Rivian. Amazon and Rivian unveil their final custom Electric Vehicles (EDV) to begin use for customer delivery, in Chicago, Illinois, July 21, 2022.

Jim Vondroska | Reuters

Amazon’s core e-commerce business continues to struggle as online sales are no longer as booming as they were at the height of the Covid-19 lockdown. The company’s online stores segment is down 4% year over year. In-store sales continued to rebound from the same period last year, growing 12%.

Amazon’s advertising business is a bright spot in a bleak online advertising quarter, and it shows the company is gaining a stake in one of its fastest growing businesses.

Advertising revenue increased by 18% in this period. Going forward, Facebook has recorded its first ever decline in revenue and expects another decline in the third quarter. At Alphabet, ad growth slowed to 12%, and YouTube showed a significant slowdown to 4.8% from 84% a year earlier.

Among other major tech companies, Microsoft also reported disappointing results this week. Apple beat the top and bottom lines, sending the stock up in after-hours trading.

Amazon’s cloud part continues to hum. Sales at Amazon Web Services jumped 33% from the previous year to $19.74 billion, above the $19.56 billion expected by Wall Street.

Operating income, which excludes investment-related loss, shrank to $3.3 billion from $7.7 billion a year earlier. AWS had operating income of $5.7 billion, which is all of Amazon’s earnings plus some of the profits in that period.

The upbeat results could also help lift the mood around Gacy, who replaced Jeff Bezos as CEO just over a year ago. Jassy’s first year on the job brought challenges, including an ongoing business battle, a market downturn, mounting regulatory pressures, and an exodus of top talent.

It is also under pressure to show it can return Amazon’s core retail business to the growth investors are used to seeing, a difficult task given the overall pressures the company is facing, such as rising inflation and slowing discretionary consumer spending.

Watch: First Look at Amazon and Rivian’s Electric Delivery Trucks

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