Big Tech companies reported mixed quarterly earnings on Thursday, a day after their top executives faced a tough congressional grilling over their market power and alleged monopolistic practices.
The staggering economic fallout caused by the coronavirus pandemic was reflected in reports from Amazon, Facebook, and Google’s corporate parent, Alphabet.
Amazon.com Inc 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 during 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.
Apple Inc on Thursday delivered blowout quarterly results, reporting year-on-year revenue gains across every category and in every geography as consumers working and learning from home during the COVID-19 pandemic turned to its products and services.
The report topped Wall Street expectations, with even some long-overshadowed categories like iPads and Macs getting fresh boosts.
The results, which included iPhone sales some $4 billion above of analyst expectations, came on the same day that U.S. gross domestic product collapsed at a 32.9% annualized rate last quarter, the nation's worst economic performance since the Great Depression.
Alphabet, Google’s holding company, reported its first-ever drop in quarterly revenue compared to the prior year. Although it was only a 2% decline, it was a telling sign of a downturn in the digital ad market while also serving as a reminder that the economy is struggling even more than it did more than a decade ago during the Great Recession. Google’s low point during that time came during the second quarter of 2009 when its revenue edged up by just 3%. Alphabet’s profit for its most recent quarter plunged 30% to $6.7 billion.
Facebook, which also makes most of its money from digital ads, recorded an 11% increase in revenue from the prior year, the social networking company’s slowest growth since going public eight years ago. The company’s profit nearly doubled to roughly $6 billion from the same time last year. Part of the big jump stemmed from special charges last year.