Amazon’s (NASDAQ: AMZN) impressive streak of four consecutive quarters of record profits has come to an end. The company reported mixed results in its second-quarter earnings release, exceeding revenue forecasts but missing profit expectations. Investors responded by sending its shares lower, with the stock falling as much as 3 percent in after-hours trading before recovering.
For the quarter, Amazon posted earnings of $2.6 billion, or $5.22 a share, up from $5.07 a year ago but the lowest since the second quarter of last year. Analysts had expected earnings of $5.56 a share. Revenue for the quarter was $63.4 billion, up 20 percent from $52.9 billion reported a year ago. Analysts expected sales of $62.52 billion.
Amazon has been investing heavily in expediting deliveries to its millions of Amazon Prime customers. The company previously announced that it would spend $800 million during the second quarter to make free one-day shipping standard for its Prime customers. As of last month, next-day delivery was available for more than 10 million Prime members. CEO Jeff Bezos said, “Free one-day delivery is now available to Prime members on more than ten million items, and we’re just getting started.”
Amazon CFO Brian Olsavsky said during the earnings call that the actual cost of speeding up shipping ended up being “a little bit higher” than previously predicted, but he did not give exact figures. Amazon also rolled out a new round of discounts across hundreds of products at its Whole Foods stores during the second quarter. While revenue at Whole Foods remained roughly flat for the quarter at $4.3 billion in sales, the company said it would have grown more than 5 percent if home delivery and in-store pick-up orders were included instead of booked under online sales.
The company gave third-quarter profit guidance that fell well-below analysts’ estimates. It is now forecasting third-quarter operating income in the range of $2.1 billion to $3.1 billion. Wall Street predicted operating income of $4.4 billion. However, Amazon’s third-quarter revenue guidance of $66 billion to $70 billion exceeded analysts’ estimates of $67.3 billion.