Amazon Q2 - Surge In Customers

Amazon reported a very good set of quarterly numbers, easily beating the streets expectations. This was thanks to more people shopping online and more businesses migrating to the cloud. The Seattle-based e-commerce giant has had to invest more money in its people and its supply chain to ensure worker safety as well as to alleviate supply chain pressures due to a big surge in demand.

Amazon reported revenues of $88.91 billion, up 40% which led to profits doubling to $5.2 billion. Online grocery sales tripled year-on-year as people avoided physical stores during the pandemic. Amazon also said that they're seeing cloud migration plans accelerate, which led to a backlog for cloud services accelerating from 58% to 65%. AWS printed $10.81 billion in revenues, up 29% year-on-year.

Amazon's CFO Brian Olsavsky said the following in relation to Amazons efforts in lowering cloud costs even further, especially for businesses like travel, entertainment and hospitality which have been decimated by this pandemic: "We think that's the right thing to do not only for their success, and so they can come out of this in better shape, but also for the long-term health of our relationship with them as an AWS provider,"

The e-commerce giant said that it spent $4 billion between April and June to stabilise its supply chain and improve worker pay and safety in these days of physical distancing. They will spend a further $2 billion on Covid-19 related costs in the current quarter as worker safety continues to take preference.

Amazon continues to hire in order to keep up with the surge in demand for online orders - people are shopping more often with larger baskets. They now employ over a million workers, making it the second largest employer in the US, coming second only to Walmart, which employs over 1.5 million people.

The good news is that due to this big surge in demand, Amazon's non-US business which usually loses money, made $345 million in profits. Amazon continues to be the best-in-class performer up over 65% year-to-date, which is why we still strongly believe that it should be a core holding of every offshore portfolio. I hope they follow Apple's footsteps and do a share-split already!