Amazon Q1 2020 Earnings Report
Key Takeaways
Amazon's first quarter 2020 results showed a 26% increase in net sales to $75.5 billion, but operating income decreased to $4.0 billion and net income decreased to $2.5 billion, or $5.01 per diluted share, compared to the previous year. The company is investing heavily in COVID-19 related expenses to protect employees and serve customers.
Net sales increased by 26% to $75.5 billion, driven by increased customer demand.
Operating income decreased to $4.0 billion, impacted by COVID-19 related expenses.
Net income decreased to $2.5 billion, or $5.01 per diluted share, compared to $3.6 billion, or $7.09 per diluted share, in Q1 2019.
Amazon plans to spend approximately $4 billion on COVID-19 related expenses in Q2 2020 to ensure employee safety and customer service.
Amazon
Amazon
Amazon Revenue by Segment
Forward Guidance
Amazon expects net sales between $75.0 billion and $81.0 billion, representing growth between 18% and 28% compared to Q2 2019. Operating income (loss) is expected to be between $(1.5) billion and $1.5 billion, compared with $3.1 billion in Q2 2019, which includes approximately $4.0 billion of costs related to COVID-19.
Positive Outlook
- Net sales are expected to grow between 18% and 28% compared to second quarter 2019.
- Guidance anticipates an unfavorable impact of approximately 70 basis points from foreign exchange rates.
- Continued investment in employee safety measures.
- Prioritizing stocking and delivery of essential items.
- AWS supporting critical research and solutions.
Challenges Ahead
- Operating income (loss) is expected to be between $(1.5) billion and $1.5 billion, compared with $3.1 billion in second quarter 2019.
- Guidance assumes approximately $4.0 billion of costs related to COVID-19.
- Uncertainty regarding the duration and spread of the pandemic.
- Potential impact on global and regional economies and economic activity.
- Potential effects on suppliers, creditors, and third-party sellers.