While brick-and-mortar retailers had to shut stores during lockdowns, Amazon hired 175,000 people in recent months and saw demand for its services soar.
Amazon.com Inc on Thursday posted the biggest profit in its 26-year history as online sales and its lucrative business supporting third-party merchants surged during the coronavirus pandemic.
Shares of Amazon, the world’s largest online retailer, rose 5% in after-hours trade.
While rival brick-and-mortar retailers have had to shut stores during government-imposed lockdowns, Amazon hired 175,000 people in recent months and saw demand for its services soar. The company said revenue jumped 40% from a year earlier to $88.9 billion.
Amazon had forecast it might lose money in the just-ended second quarter because it expected to spend some $4 billion on protective equipment for staff and other expenses related to COVID-19. It did just that – and still earned $5.2 billion, double its net income from a year prior.
Jeff Bezos, who founded the company in July 1994 and is the world’s richest person, said in a statement, “This was another highly unusual quarter.”
Amazon’s shares have risen by more than 60% this year, while the S&P 500 is virtually flat. The personal stake of Bezos, Amazon’s biggest shareholder, has surged in value in that time.
Jesse Cohen, senior analyst at Investing.com, said Amazon’s business model “perfectly positions it to expand its e-commerce dominance even more broadly as the global COVID-19 pandemic continues to flare.”
Online store sales jumped 48% to $45.9 billion in the second quarter. Meanwhile, merchants paid Amazon to fulfill and sponsor their products in order to reach customers, resulting in a 52% and 41% jump in seller services revenue and other revenue such as from ads, respectively.
The company also forecast net sales of $87 billion to $93 billion for the third quarter. Analysts on average were expecting revenue of $86.34 billion, according to IBES data from Refinitiv.
Amazon’s cloud services also saw strong demand as companies switched to virtual offices due to the spread of the pandemic. Revenue from Amazon Web Services (AWS), which sells data storage and computing power in the cloud, surged nearly 29% to $10.81 billion.