Amazon.com Inc. — along with its earnings results — keeps getting bigger, even as the company faces increased regulatory scrutiny over its size and treatment of competition.
Amazon will release its second-quarter financial results July 29, and analysts widely expect the e-commerce giant to outperform. Second-quarter revenues are set to grow nearly 30% year over year to $114.98 billion, on the higher end of Amazon's guidance, according to S&P Capital IQ estimates as of July 20. Amazon said it expects its second-quarter sales to range between $110.0 billion and $116.0 billion, or to grow between 24% and 30% compared with the second quarter of 2020.
A strong second quarter would underscore the strength of Amazon's e-commerce performance even as the pace of vaccinations has grown and digital sales on other platforms decelerate. But given recent interest in the company from regulators and lawmakers, analysts expect Amazon to frame its results in a thoughtful way, perhaps emphasizing job creation and a boost in third-party merchant sales.
'New sheriff'
The second-quarter earnings report will mark the first such report under new Amazon CEO Andy Jassy, the former head of Amazon Web Services Inc., who took the reins of the company from founder Jeff Bezos on July 5.
While it is unclear whether Jassy will be on Amazon's second-quarter conference call, investors will be looking to understand his vision for the company as Amazon faces antitrust scrutiny from lawmakers, said Tom Forte, an analyst with D.A. Davidson.
"There's a new sheriff in town," Forte said. "I expect Amazon to present the quarter in a thoughtful manner that advances its narrative as it pertains to government scrutiny."
Amazon has been at the center of several U.S. House proposals that seek to restrain the e-commerce giant and other Big Tech firms. One, the American Choice and Innovation Online Act, would prohibit dominant platforms from providing an advantage to their own private-label products, a practice known as self-preferencing. If passed, the law would prohibit Amazon from promoting its Amazon Basics products over third-party sellers on the top pages of Amazon.com search results.
Forte said Amazon may downplay its first-party sales and place more emphasis on how it is creating jobs, benefitting the economy and helping small businesses.
One way to do that is by emphasizing sales made by third-party merchants during the company's Prime Day event. Tuna Amobi, media and entertainment analyst with CFRA Research, called Prime Day, held June 21-22, a "runaway success" that should help lift sales.
Amazon, which moved the 48-hour shopping event to the second quarter from the third, did not report specific sales metrics for the event. But the company said on June 23 that Prime Day 2021 delivered the biggest two-day period ever for Amazon's third-party sellers, most of which are small and medium-sized businesses. Prime members purchased more than 250 million items, from Roomba robot vacuums to back-to-school backpacks, laptops and Crayola products.
Revenue growth
Amazon, one of the main beneficiaries of pandemic-induced behavioral shifts that forced millions of Americans home last spring, has already seen two years of quarterly revenue growth.
Revenue jumped 40.2% to $88.91 billion in the second quarter of 2020 on elevated customer demand that began in early March that year. Amazon's first-quarter 2021 revenue rose 43.8% to $108.52 billion, after a strong holiday season.
By comparison, brick-and-mortar rival Walmart Inc. saw a decline in digital sales in the first quarter.
Market share
With revenue growth continuing, Amazon is expected to increase its share of total e-commerce sales in the U.S. to 41.4% in 2021, up from 39.1% in 2020, according to a July report from eMarketer.
Meanwhile, eMarketer forecasts that Walmart will capture a 7.2% share in 2021, while the No. 3 player, eBay Inc., is expected to capture 4.3%.
According to eMarketer, online sales per buyer in the U.S. are expected to reach $5,458 in 2023, up nearly 26% from $4,335 in 2021.
The $1,400 stimulus payments distributed to eligible Americans this spring will also have played a role in sales growth during the second quarter. "Consumer spending has been holding up pretty well, and a large part of that is because of stimulus checks, which provide more discretionary spending," Amobi said.
Elevated demand for e-commerce sales in the first quarter should carry into the second quarter, although at a slower pace than in the second quarter of 2020 when government lockdowns took effect, said Cindy Liu, director of forecasting at eMarketer.
Other revenue streams
Of course, e-commerce is only part of Amazon's growth equation. AWS will likely see revenue rise due to continued demand for cloud-computing infrastructure, said Daniel Sparks, contributing senior technology analyst with The Motley Fool.
Amazon will also see a boost in advertising as more businesses pay to appear in top search results on Amazon.com and in ads on Prime Video, Sparks said.