Moving Prime Day should help Amazon in Q2.
What you need to know
- Amazon's Q1 2021 financial earnings have been released, showing a 44% increase in sales.
- The company expects the momentum to continue into Q2 as a result of increased online shopping.
- Prime Day has been moved to later this quarter, which is expected to bolster the company's Q2 earnings.
Amazon has just announced its Q1 2021 financial earnings, reporting a substantial gain in earnings. That includes a 44% year-over-year increase in sales, which helped Amazon accrue more than $108 billion in revenue. The growth is undoubtedly a result of the ongoing COVID-19 pandemic, which led to more online shopping in many countries that faced lockdowns. It also shows its continued strength as it prepares for the upcoming transition to its new CEO-elect.
Amazon CFO Brian Osofsky discussed how the company expects this strong momentum to continue in Q2, despite the pandemic seemingly winding down and more countries starting to open up. One major reason for this is Amazon Prime Day, which was pushed to October 2020 due to the pandemic. The two-day sales event has been rumored to take place this June, which Osofsky hinted to in the earnings call:
July is a big vacation month, so it might be better to have for customers, sellers, and vendors to experiment with a different time period. We experimented the other way, obviously in 2020, by moving it into October, but we believe that it might be better timing, later in Q2. So that's what we're testing this year.
The annual Prime Day event provides exclusive sales on many products and services. It's also a big opportunity for small and medium businesses, which make up a large amount of Amazon's third-party sellers and helped drive a 29% Q1 revenue growth in North American alone. A specific date wasn't announced during the call, but we should expect details about Prime Day soon, given that Q2 ends after June.
Other highlights from Q1 earnings include lower-than-expected COVID-19-related operating costs and higher revenue from AWS, which grew 32% year-over-year to $13.5 billion and undoubtedly continues to benefit from the pandemic as companies and employees continue to operate largely from home. AWS also benefits from services like Disney+ that rely on Amazon's cloud infrastructure, especially as more users take to video streaming. On the streaming front, Amazon Prime Video, which is included with the Amazon Prime subscription, also saw a 70% increase in streaming hours, a metric that nearly doubled for Twitch.
Going forward, Amazon hopes to continue improving its delivery times, which were challenged by the increase in online shopping but should improve thanks to initiatives like In-Garage Grocery Delivery. It also remains focused on improving its AI capabilities on the best Alexa devices and looks forward to new content for Prime Video, such as the Lord of the Rings project that's currently in production.
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