Amazon released its Q2 earnings late last week. While the days of heavy growth of 20%+ and even 40%+ growth are long gone, Amazon had a solid Q2 and even saw its ecommerce sales rally a bit after several quarters of flatness.
Net sales increased 11% to $134.4 billion in the second quarter, compared with $121.2 billion in second quarter 2022.
North America segment sales also increased 11% year-over-year to $82.5 billion.
Operating income increased to $7.7 billion in the second quarter, compared with $3.3 billion in second quarter 2022. In North America, operating income was $3.2 billion, compared with an actual operating loss of $0.6 billion the prior year.
But as usual lately, the overall growth of operating income was dominated by Amazon’s AWS web services unit, which brought home operating income of $5.4 billion in the quarter.
Amazon’s international unit continues to struggle, with a negative operating income of $895 million.
That led to net income of $6.7 billion in the second quarter, compared with a net loss of $2.0 billion in second quarter 2022.
Even when it was losing money, Amazon always pointed to its usually more impressive cash flow performance. In Q2, operating cash flow increased 74% to $61.8 billion for the trailing twelve months, compared with $35.6 billion for the trailing twelve months ended June 30, 2022.
Free cash flow improved to an inflow of $7.9 billion for the trailing twelve months, compared with an outflow of $23.5 billion for the trailing twelve months ended at the end of June last year.
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 Amazon was also fairly bullish on its prospects for Q3, with forecast net sales expected to be between $138.0 billion and $143.0 billion, representing growth of 9% to 13% compared with third quarter 2022.
Operating income is expected to be between $5.5 billion and $8.5 billion, compared with $2.5 billion in third quarter 2022.
As a note, Amazon is today more of a services company than a product company. Its service revenue (AWS, logistics services, marketplace commissions, advertising and more) were 53% of sales in Q2.
Though basically flat for several recent quarters with one exception, Amazon’s on-line sales growth came in at 4%. That’s better than flat, but it is simply amazing how much on-line sales have slowed after massive growth in 2020 and into 2021 as a result of the pandemic.
Amazon saw fulfillment costs – which include the costs of running its fulfillment network and some inbound logistics cost, but not shipping – came in at $21.3 billion. That also represents an amazing 40.2% of on-line sales.
Shipping costs were $20.4 billion, up 6% in Q2, versus 4% growth in on-line sales. That also represented 38.5% of on-line sales, versus 37.9% in Q2 2022.
A couple of days prior to the earnings release, Amazon announced it had shipped 1.8 billion order with same or next day delivery in 1H 2023, four times the number delivered that quickly in 2019.
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