Amazon's Q2: Sales up 23 percent, misses the mark on earnings

UPDATED: During the shareholders call, CFO Tom Szkutak batted a few questions about more specific AWS revenue and growth figures.
Written by Rachel King, Contributor on

Following the debut of a near endlessly rumored Kindle-branded phone, Amazon reported second quarter earnings after the bell on Thursday.

The Internet giant reported a net loss of $126 million (statement), or 27 cents per share, compared to just two cents, the year prior.

However sales were up with a revenue of $19.34 billion, an increase of 23 percent year-over-year.

Wall Street was expecting a loss at 14 cents per share on a revenue of $19.34 billion.

In reaction to a much larger-than-projected loss, Amazon shares started to tumble in after-hours trading by as much as five percent.

Focusing on the slew of products the Seattle-headquartered corporation unveiled during the second quarter (and even the last few weeks), CEO Jeff Bezos reflected on the quarter in prepared remarks:

We’ve recently introduced Sunday delivery coverage to 25% of the U.S. population, launched European cross-border Two-Day Delivery for Prime, launched Prime Music with over one million songs, created three original kids TV series, added world-class parental controls to Fire TV with FreeTime, and launched Kindle Unlimited, an eBook subscription service. For our AWS customers we launched Amazon Zocalo, T2 instances, an SSD-backed EBS volume, Amazon Cognito, Amazon Mobile Analytics, and the AWS Mobile SDK, and we substantially reduced prices. And today customers all over the U.S. will begin receiving their new Fire phones — including Firefly, Dynamic Perspective, and one full year of Prime — we can’t wait to get them in customers’ hands.

Amid another round of price cuts this spring, AWS announced the availability of R3 instances, the next generation of the tech giant's cornerstone Elastic Compute Cloud (EC2) memory-optimized instances.

Earlier this month, AWS welcomed Zocalo, a fully-managed enterprise storage and sharing service with administrative controls and feedback capabilities, during the Amazon Web Services 2014 Summit in New York City.

Amazon famously does not break out sales results for its cloud unit, instead folding it in to the "Other" category with various advertising products. Domestically, this vertical generated $1.168 billion in revenue, up from 844 million during the second quarter of 2013.


Furthermore, the AWS team grew "by thousands of employees this past year," according to the report.

For the current quarter, analysts expect another loss from Amazon, albeit one cut in half at seven cents per share on a revenue of roughly $20.84 billion.

Amazon followed up with a revenue guidance range of $19.7 billion to $21.5 billion, translating to sales growth of 15 to 26 percent.

UPDATE: During the shareholders call, CFO Tom Szkutak batted a few questions about more specific AWS revenue and growth figures.

Highlighting North America as AWS' strongest region (in terms of sales versus datacenter footprint), Szkutak revealed that AWS saw usage growth climb 90 percent year-over-year in Q2.

But, much like the rest of tech and business worlds, Amazon is also doubling down to expand its reach in China.

In terms of China, you know we are continuing to invest on the half of customers there, obviously trying to make the experience even better for customers. In terms of improved in stock levels, we've spent certainly added a lot of fulfillment capacity over time in China, and we're doing a lot of interesting things to better serve customers in China.

Slides via Amazon Investor Relations

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