Amazon's Q2 misses on the bottom line, and it warned its profit will disappoint again in Q3

Amazon's second-quarter profit fell well shy of Wall Street's expectations. Worse, it projected its bottom line in the third quarter will also be disappointing.

The company reported earnings per share of $5.22 for the just-completed quarter. That was up from the year-ago, but only by about 3% — significantly below the nearly 10% jump in per share profits analysts were expecting.

Meanwhile, the company projected that its operating profit, which doesn't take into account interest expenses or income or taxes, would range from $2.1 billion to $3.1 billion. That's not only below what it posted last year, but, at the low end, is less than half what Wall Street had projected.

Investors sold the shares on the news. In recent after-hours trading, the company's stock price was down $46.42, or 2.4%, to $1,927.40.

Here's what the company reported and how it compared with analysts' projections and the company's year-earlier results:

Q2 revenue: $63.4 billion. Analysts were looking for $62.5 billion. In the same period last year, Amazon posted $52.9 billion in sales.

Q2 EPS: $5.22. Wall Street had predicted $5.56. The company earned $5.07 in the second quarter of 2018.

Q3 revenue (guidance): $66 billion to $70 billion. Wall Street had previously forecast $67.2 billion. Amazon recorded $56.6 billion in third-quarter sales last year.

Q3 operating income (guidance): $2.1 billion to $3.1 billion. Analysts had projected an operating profit of $4.3 billion for the period. In the same period a year ago, the company posted operating income of $3.7 billion.

Q3 EPS (guidance): Amazon didn't offer specific earnings guidance. But its forecast for operating income implies a earnings per share range of $4.11 to $6.28 for the quarter, assuming its tax rate, share count, interest income and expenses, and other, non-operating expenses remain the same. Analysts, by contrast, had projected $6.61. The company posted a profit of $5.75 a share in the same period a year ago.

Amazon's shares closed regular trading down $26.99, or 1.4%, to $1,973.82. At the end of the session, though, the stock was still up more than 4% since its last earnings report in April.

The company has benefitted greatly in recent years from the growth of Amazon Web Services, its cloud-computing business. In the second quarter, AWS again accounted for a disproportionate share of Amazon's operating profit. The business posted operating income of $2.1 billion in the period, or more than two-thirds of the company's total operating profit.

But for the second period in a row, AWS's sales growth slowed. In the second quarter, the business' revenue grew by 37% from the same period a year earlier to $8.4 billion. That was down from a 42% annual rate in the first quarter, a 46% rate in the fourth quarter last year, and a 49% rate in the second quarter last year.

The just-completed quarter also was the first quarterly period since at least 2013 that Amazon's cloud-computing unit had grown at an annual rate of less than 40%.

But other parts of Amazon's business showed signs of a pick-up. Sales through its online stores grew by 16% in the second quarter, excluding the effects of foreign exchange fluctuations. That was the fastest rate by which its e-commerce business had grown since the fourth quarter of 2017.

And both Amazon's North American and international businesses grew at a faster pace than they did in the first quarter. The North American unit grew by 20% from the same period a year ago to $38.7 billion. That was up from a growth rate of 17% in the first quarter. Its international business grew by 17%, excluding foreign currency changes, to $16.4 billion. In the first quarer, that segment at a 16% annual clip, excluding such fluctuations.

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