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Covid-19: Lockdown lifting slows Amazon’s sales growth during Q2

Amazon’s revenue growth rate hits a post-pandemic speed bump, as the lifting of lockdown restrictions in various countries sees fewer people shopping online

Amazon’s revenue growth markedly slowed during the second quarter of 2021, due to Covid-19 lockdown restrictions lifting around the world.  

The company posted an overall revenue for Q2 of $113bn, which constitutes a year-on-year rise of 27% compared with last year, while its profit was up 50% overall and hit $7.8bn during the quarter.

During the same period last year, the company achieved a revenue growth rate of 40%, as lockdown restrictions across the world resulted in consumers becoming more reliant on online retail services to source groceries and other goods than ever before.

In a conference call with analysts to discuss the results, Amazon chief financial officer Brian Olsavsky, said the slowdown in the company’s year-on-year sales is the direct result of lockdown restrictions lifting across the world, and “people are getting out of their homes”.

As a result, the company is expecting a pattern of “difficult” year-on-year revenue comparisons over the coming quarters, as the demand for online retail services starts to level off and return to pre-pandemic levels.

“[It’s] the impact of people getting vaccinated and getting out in the world, not only shopping offline, but also living life and getting out,” he told analysts, on the call transcribed by Seeking Alpha.

The company’s cloud computing arm, Amazon Web Services (AWS), posted a revenue of $14.89m for the quarter, which is up 38% on Q2 2021.

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Putting these figures into further context during the conference call, Olsavsky said these results mean AWS is now a $59bn annualised run rate business, and demand for its cloud services remains strong.

“AWS set more revenue quarter-over-quarter and year-over-year than any quarter in our history,” he added.

“We can see good trends with new contracts and new clients that are either signing up with AWS and making the journey to the cloud or accelerating their journey to the cloud, or setting up new longer-term contracts with us.”

The publication of Amazon’s second quarter results coincides with former AWS chief, Andy Jassy, taking over the reins of the company from its long-standing CEO, Jeff Bezos, who stepped at the start of July.

In his first financial statement as CEO, Jassy thanked Amazon’s staff for all their help with tending to the needs of its customers, both on the retail and cloud side, throughout the pandemic.

“Over the past 18 months, our consumer business has been called on to deliver an unprecedented number of items, including PPE, food, and other products that helped communities around the world cope with the difficult circumstances of the pandemic,” said Jassy. “At the same time, AWS has helped so many businesses and governments maintain business continuity, and we’ve seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud.

“Thank you to all of our passionate, innovative, mission-driven employees around the world for continuing to stay focused on delivering for customers – I am very excited to work with you as we invent and build for the future.”

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