Amazon (AMZN) earnings for the second quarter of 2022

Amazon shares rose more than 13% in extended trading on Thursday after the company informed second-quarter revenue was better than expected and gave an optimistic outlook.

Here’s how the company did it:

  • earnings per share: Loss of 20 cents
  • Income: $121.23 billion, up from $121.23 billion. According to Refinitiv, $119.09 billion is expected.

Here’s how other key Amazon segments performed during the quarter:

  • Amazon Web Services: $19.7 billion vs. $19.56 billion expected, according to StreetAccount.
  • Advertising: $8.76 billion, up from $8.76 billion. According to StreetAccount, $8.65 billion is expected.

Revenue growth of 7% in the second quarter beat forecasts, contradicting a trend among her peers at big tech companies, who had all reported disappointing results through Thursday. Apple, along with Amazon, lived up to expectations.

Amazon said it expects third-quarter revenue to be between $125 billion and $130 billion, representing a 13% to 17% increase. Analysts were expecting a sale of $126.4 billion, according to Refinitiv.

Amazon is struggling with higher costs as the pandemic-driven expansion has left the company with too many workers and too much storage space.

“Despite continued inflationary pressures on fuel, energy and transportation costs, we are making progress on the more controllable costs we alluded to last quarter, particularly by improving the performance of our order fulfillment network,” said CEO Andy Jassi.

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Amazon cut its headcount by 99,000 to 1.52 million employees as of the end of the second quarter after nearly doubling during the pandemic.

Technology companies announced their dismissal, suspending hiring and withdrawing job offers in the midst of economic uncertainty. Speaking to reporters, CFO Brian Olsavsky said that Amazon will continue to hire engineers for divisions like Amazon Web Services and advertising, but will be wary of hiring in other areas.

“I think people should take a step back and question their hiring plans,” Olsawski said. “We are also doing this. I don’t think you’ll see us recruiting at the same pace as last year or the last few years.”

Amazon recorded a $3.9 billion loss on an investment in Rivian after shares in the electric car maker fell 49% in the second quarter. Thus, the total loss from investments this year amounted to $11.5 billion.

Due to the write-down of Rivian shares, Amazon’s total loss for the quarter was $2 billion. Analysts’ EPS estimates vary widely, making it difficult to compare actual results to the agreed number.

Rivian CEO RJ Scaringe and Udit Madan stand in front of the new Rivian-based Amazon EV van. Amazon and Rivian are unveiling their latest custom electric delivery vehicles (EDVs) to start using them for delivery to customers, in Chicago, Illinois on July 21, 2022.

Jim Wondruska | Reuters

Amazon’s core e-commerce business continues to suffer as online sales no longer flourish as they did during the height of the Covid-19 shutdown. The company’s online store segment shrank by 4% year-on-year. Physical store sales continued to recover year-over-year, up 12%.

Amazon’s advertising business is a bright spot in the dark quarter of online advertising and shows the company is gaining share in one of its fastest growing businesses.

Advertising revenue grew by 18% during this period. facebook, meanwhile, recorded its first-ever drop in revenue and forecast another decline for the third quarter. AT Alphabetad growth slowed to 12% and YouTube saw a sharp slowdown to 4.8% from 84% a year earlier.

Among other leading technology companies, Microsoft also reported disappointing results this week. Apple hit the top and bottom lanesby raising shares during off-hours trading.

Amazon’s cloud segment continues to evolve. Selling on Amazon Web Services jumped up 33% year-over-year to $19.74 billion, up from the $19.56 billion Wall Street forecast.

Operating income, excluding investment-related losses, fell to $3.3 billion from $7.7 billion a year earlier. AWS had $5.7 billion in operating income, which is all of Amazon’s earnings plus a portion of that period’s earnings.

The optimistic results could also help improve the mood around Yassy, ​​who replaced Jeff Bezos as CEO just over a year ago. yassi first year at work has been marred by problems, including ongoing labor struggles, a downturn in the market, growing pressure from regulators and an exodus of top talent.

It should also show that it can return Amazon’s core retail business to the growth investors are accustomed to, a challenging task given the macroeconomic pressures the company is facing, such as soaring inflation and slowing consumer discretionary spending.

WATCH: First look at Amazon and Rivian electric vans