Amazon.com’s second-quarter revenue surpassed Wall Street expectations, but its earnings fell short of analysts’ hopes.

Share story

The steamroller that is Amazon.com continued its unflagging course to dominance in the retail world, raking in a tidy $38 billion in second-quarter sales — a 25 percent jump from last year — even as rivals struggle.

But Amazon’s latest earnings report, released Thursday, showed that the greatest growth didn’t come from the company’s sale of its own retail goods.

Revenue from other ventures — from logistics to Prime memberships to cloud computing — grew at a way faster pace, a sign of how the core of Amazon’s business is changing as the retail giant becomes a major platform for technology, media and commerce.

Excluding the impact of foreign-exchange gyrations, the money Amazon collects from third-party merchants — in exchange for providing them with logistics services or just letting them sell on its online site — rose 38 percent in the second quarter, to $7 billion.

Amazon Web Services, the profitable unit that rents out computing power and storage, saw revenue rise 42 percent to $4.1 billion. That means it’s now a $16 billion-a -year venture — the largest, by far, in the cloud computing world.

And the fees Amazon gathers from $99-a-year subscriptions to the Prime loyalty program and other services (such as music, video, and audiobooks) rose 51 percent to $2.16 billion.

In comparison, direct sales by Amazon of retail products rose by 17 percent to $23.75 billion. While still accounting for the majority of the company’s revenue, its share is shrinking as other businesses outpace its growth.

The strong revenue doesn’t mean the company is ready to shower investors with consistently high earnings, as it focuses on reinvesting cash flow into growth.

Despite bringing home surprisingly high revenue — analysts had expected a 22.3 percent jump instead of the actual 25 percent — the company on Thursday disappointed Wall Street investors hoping for more profit.

Earnings per share totaled 40 cents, or $197 million, down from $1.78 per share, or $857 million, in the same period last year. Analysts had forecast earnings of $1.42 per share.

Amazon reported its results after the market closed, and investors pushed the shares down 3 percent to $1,014.54 in after-hours trading. The drop in the stock’s value — which began earlier in the day, even before the results were released — ended Amazon CEO Jeff Bezos’ brief reign as the richest person in the world, a title he had stolen from Bill Gates on Thursday morning in the midst of an early rally.

Amazon’s second-quarter operating income fell 51 percent to $628 million, reflecting a ramp up in the construction of warehouses and data centers as Amazon invests to meet demand, as well as an epic hiring spree.

As of the end of June, Amazon employed 382,400 people — 42 percent more than in the same period last year.

It’s not the first humongous payroll expansion by Amazon. The company has grown at a similar pace over the last few quarters, and now — as it prepares to take over Whole Foods Market and hire an extra 50,000 people before the holiday retail season — it’s on track to soon become the second-largest employer among Fortune 500 firms, after Wal-Mart.

A lot of those hires have been relatively low-paid warehouse and logistics workers. But last quarter’s hiring wave focused heavily on software developers, as well as sales people for Amazon Web Services and an emerging advertising business.

Amazon Chief Financial Officer Brian Olsavsky pointed out in a call with analysts Thursday that hiring for these roles exceeded the company’s overall growth rate. “We are continuing to invest a lot in these areas,” he said.

But investment also continues apace in Amazon’s core retail offerings. The company made a huge bet last month by agreeing to acquire Whole Foods for $13.7 billion. Olsavsky said that Amazon acquiring a brick-and-mortar footprint didn’t imply an abandonment of its other approaches to selling food and other consumables.

“We believe there will be no one solution,” he said. “We’ll see how our customers respond.”