Amazon beat expectations for both revenue and earnings in the quarter despite experiencing some softness in its cloud-computing business. Net product sales increased $2.5 billion or 4.3% compared to the year-ago quarter, while net service sales increased $10.7 billion or 16.5%.
Amazon’s net sales jumped 11% to $134.4 billion, up from $121.2 billion in the year-ago quarter.
- North American sales were $82.5 billion, or 61% of total revenue.
- International sales were $29.7 billion, or 22% of total.
- AWS represented $22.1 billion of sales, or 17% of total.
Operating income increased $4.4 billion:
Total operating income for the quarter was $7.7 billion compared to $3.3 billion for the prior-year quarter.
- North America reported operating income of $3.2 billion, a $3.8 million improvement compared to the year-ago quarter.
- While International reported a loss of $0.9 billion, results were a $0.9 billion improvement over the prior year.
- Operating income from AWS was $5.4 billion, down slightly from the prior-year quarter.
- Operating income as a percent of sales for AWS was 24.4% compared to 3.9% for North American sales, highlighting the outsized importance of AWS to the Company’s profitability.
What’s driving revenue at Amazon:
63% of the Company’s second-quarter sales came from online stores and third-party services. Non-core businesses, such as AWS, advertising, subscription services, and physical stores, represented 37% of sales.
- Online stores: $53.0 billion, or 47.2% of total non-AWS sales
- Third-party services: $32.3 billion, or 28.8%
- Advertising services: $10.7 billion, or 9.5%
- Subscription services: $9.9 billion, or 8.8%
- Physical stores: $5.0 billion, or 4.5%
Prime Day provided a strong revenue boost:
According to the Company, this year was the biggest Prime Day ever, with $12.7 billion in sales over the two-day event.
- Prime Day sales represented 15% of the Company’s quarterly sales from online stores and third-party services.
- Shoppers purchased 375 million items during Prime Day 2023, up from 300 million last year.
- The average Prime Day order was $54.05.
Amazon has appeared to have adjusted to the new post-pandemic norm, and brands should continue to focus on maximizing their sales opportunities on the platform. Amazon expects year-over-year sales to grow between 9% and 13% in the third quarter and operating income to be between $5.5 billion and $8.5 billion – a significant increase compared to $2.5 billion in the third quarter of 2022. The Company is also investing $100 million in the AWS Generative AI Innovation Center to “help customers successfully build and deploy generative AI products, services, and processes.”