Second quarter sales at Amazon rose 20% over the second period of 2018, reaching $63.4 billion. Net income increased from $2.5 billion in the quarter, ended June 30, 2018, to $2.6 billion in the most recent period. The revenue gain was ahead of expectations from analsysts, but earnings came in lower than anticipated.
In a conference call with analysts, Amazon CFO Brian Olsavsky said one reason for the lower-than-expected earnings was the higher-than-expected costs in moving Amazon’s core Prime free delivery benefit from two days to one. Amazon had expected to spend about $800 million on the initiative in the quarter.
In terms of revenue growth, Amazon’s cloud service, AWS, had a 38% gain in the quarter, to $8.4 billion, while subscription services also had a 38% revenue increase, to $4.7 billion. Third-party sales jumped 23%, to $12 billion, while online store sales increased 14%, to $31 billion. Sales of physical stores were flat at $4.3 billion. (Physical store sales come largely from Whole Foods, not Amazon's bricks-and-mortar bookstores.)
For the third quarter, Amazon said it expects revenue to increase between 17% and 24% over last year’s third quarter. Operating income is projected to fall from $3.7 billion to between $2.1 billion and $3.1 billion.
