Amazon's earnings report for Q1 2020 - Business Insider

Amazon reported its first-quarter earnings on Thursday after the bell.Amazon's sales grew faster than expected as more people shopped online amid COVID-19.But it missed on earnings as COVID-19-related costs across the supply chain increased.Amazon shares dropped about 5% in after-hours trading.Visit Business Insider's homepage for more stories.

Amazon reported huge growth in first-quarter revenue but a miss on earnings on Thursday.The mixed results show how the coronavirus outbreak is leading to more shoppers on Amazon, albeit at an increased cost as the company is dealing with a number of costly changes, including supply chain lockdowns and warehouse safety upgrades.Amazon stock is down about 5% in after-hours trading.Here are the most important numbers:

Q1 EPS (GAAP): $5.01 versus expectations of $6.27 per shareQ1 Revenue: $75.5 billion versus expectations of 73.74 billionAmazon Web Services: $10.22 billions versus expectations of $10.29 billionAmazon CEO Jeff Bezos said in an unusually long statement that the epidemic is causing a lot of uncertainties, adding that the company expects to spend all of the $4 billion it's projected to make in second-quarter profits on COVID-19-related expenses.

“If you're a shareowner in Amazon, you may want to take a seat, because we're not thinking small,” Bezos said in a statement. “Under normal circumstances, in this coming Q2, 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.”Amazon clearly saw a massive demand surge as more people bought things online to avoid physical stores during the pandemic. The 26% revenue growth exceeds street estimates of 22%. Paid unit growth jumped 32%, up from last year's 10% growth rate. Even its “Physical Stores” sales, which includes Whole Foods revenue, grew 8% from last year, an unusual spike for a segment that hovered around 1% growth in the past year.Meanwhile, costs increased as Amazon had to put additional safety measures and pay raises across its warehouses. Amazon is hiring 75,000 more warehouse and delivery drivers, after having added 100,000 new employees since March. Shipping costs also jumped 49% to $10.9 billion. Operating income dropped $400 million from last year to $4 billion for the quarter.Amazon's cloud service continues to be a the company's main profit-driver. It reported $3 billion in operating profit, accounting for 77% of Amazon's total operating profit. Meanwhile, AWS crossed the $10 billion quarterly revenue mark for the first time, growing 33% from last year.

Despite concerns of the pandemic causing less spending on Amazon's advertising service, the segment saw a 44% sales increase to $3.9 billion in the quarter, showing little impact on one of its fastest growing business segments.Amazon's stock hit record highs earlier this month, and was up almost 30% year-to-date, far outpacing the broader market.