Amazon.com Inc exceeded expectations in the second quarter, reporting a revenue of $88.9 billion, a 40% increase from the previous year. The surge in online shopping due to the COVID-19 pandemic drove this growth, as brick-and-mortar retailers had to close their doors. In response to the increased demand, Amazon hired 175,000 employees during this period.

The company’s success can be seen in its stock performance, with a 5% rise in after-hours trade. This quarter also marked the highest profit in Amazon’s 26-year history, with a net income of $5.2 billion, double that of the previous year. Jeff Bezos, the founder of Amazon and the world’s richest person, acknowledged that this quarter was “highly unusual” but attributes the company’s continued success to its business model.

In the second quarter, Amazon’s online store sales increased by 48%, reaching $45.9 billion. Additionally, seller services revenue and other revenue saw significant jumps of 52% and 41%, respectively, as merchants paid more to have their products fulfilled and sponsored by Amazon. The company’s Chief Financial Officer, Brian Olsavsky, expressed surprise at the outsized profit, as they initially expected sales of lower-margin products to dominate. However, the sales mix shifted back to a more normal mix, allowing Amazon to ship more products than anticipated.

The COVID-19 pandemic has also had a positive impact on Amazon’s international business, with increased customer spending in Europe and Japan. Online grocery sales tripled compared to the previous year, and streaming video hours doubled worldwide. The convenience of delivery and video services offered through Amazon Prime contributed to increased customer spending and loyalty.

Looking ahead, Amazon forecasts net sales of $87 billion to $93 billion for the third quarter, surpassing analysts’ expectations. However, the company anticipates higher costs during this period as it prepares for the holiday season and continues to invest in COVID-related expenses. Despite these costs, Amazon expects an operating profit between $2 billion and $5 billion for the third quarter, reaffirming its position as a dominant player in the e-commerce industry.

Useful links:
1. CNBC: Amazon Q2 2020 earnings
2. Business Insider: Amazon reports second-quarter earnings