People & Money

Amazon Hits $100bn Sales Thanks to the Pandemic

Hard figures are coming in to confirm anecdotal evidence that the new coronavirus pandemic has been a boom for technology companies. The pandemic boosted shopping online, for necessities and even luxury goods, as consumers were forced to stay indoors. This has netted a record $108.5 billion in sales for the e-commerce giant Amazon in the first quarter of the year (2021). This is a 44% rise compared to the corresponding period of last year (2020).

Amazon’s advertising arm is emerging as a big new profit centre, with revenue up by 77% year-on-year to $6.9 billion in the first quarter. But Amazon’s most profitable business is its cloud services, AWS, which has been boosted by demand from businesses that need to provide remote access to documents for millions of employees working from home.  Half of Amazon’s $4.2 billion operating income came from the cloud services division.

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Describing Amazon’s earnings as ‘staggering’, Charlie O’Shea, an analyst at Moody’s, referenced the company’s improved margins in its AWS business. “[AWS] operating income increased by over $1 billion, and increased around $600m from Q4 2020 on only $800 million in revenue growth, indicating a significant leveraging of expenses driving margin expansion,” he was quoted as saying.

Amazon Aiming Even Higher

Amazon confidently looks ahead to a future of rising sales and profits, pandemic or no pandemic.

In a revenue and profit guidance, the company said it hopes to announce an overall revenue between $110 billion and $116 billion in the current quarter.

On how the company tends to achieve the projected growth, Brian Olsavsky, Amazon’s chief financial officer, said e-Commerce delivery speeds in Europe were now back to pre-pandemic levels, but that the USA was “not quite” at full power.

According to him, Amazon would continue its investment in logistics to overcome the delivery speed handicap in the USA. Olsavsky explained that it is in this light that the company added more than 500,000 workers in 2020.

Also Read: https://arbiterz.com/amazons-jeff-bezos-the-journey-to-200-billion/

Going by Amazon’s projection, net income in the current quarter would stand between $4.5 billion and $8 billion.

Similarly in Nigeria, the growth of remote working has lifted demand for data and buoyed the incomes of telecommunications companies.

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