Amazon Posts 11% Rise in Revenue as Growth Improves

All that cost-cutting at Amazon might be paying off. The company isn’t back to the torrid growth of its youth but it managed to beat Wall Street expectations on Thursday.

Revenue in the second quarter rose 11 percent to $134.4 billion, the retailer said, slightly better than the 9 percent it had been achieving recently. That was about $3 billion more than analysts had been forecasting.

Net income was 65 cents a share versus expectations of 35 cents. Last year, the company lost 20 cents a share in the quarter because of a slump in the value of its investment in Rivian Automotive, the electric truck maker.

“We continued lowering our cost to serve in our fulfillment network, while also providing Prime customers with the fastest delivery speeds we’ve ever recorded,” Andy Jassy, Amazon’s chief executive, said in a statement.

Amazon shares rose more than 7 percent after the earnings were announced.

July marked two years since Mr. Jassy took over as chief executive from Jeff Bezos, Amazon’s founder. Mr. Jassy’s stewardship so far has been a period of retrenchment. Amazon flourished during the pandemic, supplying necessities and diversions to millions of suddenly grounded families, and made the reasonable assumption that the boom would last.

It didn’t. There were layoffs and cutbacks last winter, a time when many of the big tech companies consolidated swollen operations. The stock fell sharply in 2022 after years of growth. It has since recovered much of the loss but is still below its peak.

One of Mr. Bezos’ last major actions before his departure was to add “Strive to be Earth’s best employer” to the company’s leadership principles. “Leaders ask themselves: Are my fellow employees growing? Are they empowered?” the principle asks.

The first Amazon union was formed at a warehouse in Staten Island last year but the company has refused to negotiate with it and is challenging its validity. The National Labor Relations Board filed a complaint against Amazon in July for refusing to bargain. Meanwhile, employees’ return to the office post-pandemic has been unusually contentious for the company.

Amazon is so large, with over half a trillion dollars in annual revenue, that it is difficult to move the needle much. In earlier years, the retail division grew like gangbusters. Then the AWS cloud division provided the torrid growth, and finally advertising pushed the numbers. It’s hard to see where the next phase of growth will come from.

Most new programs, like this week’s launch of grocery service for customers who are not Prime club members, are incremental. Non-Prime members will pay higher delivery fees.

What has some analysts worried is that Amazon’s newfound desire to keep expenses down clashes with its longstanding obsession over making customers happy.

Tom Forte, an analyst with D.A. Davidson, wrote a note last week to investors about several disappointments he had experienced with Amazon, including no longer being able to have a defective product picked up for free by UPS. Now, he wrote, there is a $7.99 fee.

“In our view, Amazon is playing a ‘game of chicken’ and banking on other e-commerce companies not to offer a superior service, instead of its historical approach of working backwards with a customer-obsessed approach,” Mr. Forte wrote.

If the second quarter at Amazon was relatively quiet, the current quarter is likely to produce more in the way of headlines. The Federal Trade Commission is widely expected to file a lawsuit against the company accusing it of violating antitrust laws. A resolution could be years away.

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