Published 09:48 IST, May 1st 2020
Amazon's revenue up 26% to $75 Bn but profit down 30%; Bezos says $4 Bn Covid cost coming
Amazon’s net sales increased to 26% to $75.5 billion in the first quarter, exceeding Wall Street’s expectations as people around the world relied on the company
- Republic Business
- 3 min read
Amid the COVID-19 crisis, tech giant Amazon’s net sales increased to 26% to $75.5 billion in the first quarter, exceeding Wall Street’s expectations, as people around the world continued to rely on the company’s massive e-commerce infrastructure. However, while the revenue rose significantly, profits fell more than 30% to $2.5 billion, or $5.01 per share, as the costs of scaling up for the pandemic weighed on the Seattle tech giant’s bottom line.
Amazon to spend $4 billion on COVID-19 initiatives
Amazon CEO Jeff Bezos made it clear that it’s the company is only getting started and informed its shareholders that it will spend $4 billion in the current quarter on initiatives related to COVID-19.
“Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money. If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Amazon CEO Jeff Bezos said in a lengthy statement in the company’s earnings news release.
'Hardest time we’ve ever faced': Bezos
Bezos further said that the crisis “is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced".
"Under normal circumstances, in this coming Quarter 2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe," Bezos said.
"This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities. There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees," he added.
Amazon has grown to more than 935,000 employees worldwide, including 95,000 new hires in just the past few weeks, quickly rendering the number in its first-quarter earnings report out of date as it grows in response to the global pandemic.
Updated 09:48 IST, May 1st 2020