Amazon appears to have done it again, and one day after a dramatic collapse by Netflix, and shortly after the latest tweet from Trump suggested the president could crack down on the world’s biggest online retailer, AMZN is back to its short-crushing ways, reporting EPS which smashed expectations, but missing badly on revenue while guiding well below consensus. In kneejerk response, the stock initially tumbled as much as 5% before spiking higher.
Here are the details from Amazon’s just concluded second quarter
- EPS $5.07, blowing away estimates of $2.49, and above the highest forecast (range $1.53 to $3.09)
- Operating income was $2.98 billion, also far above the estimate $1.71 billion (range $1.31 billion to $1.95 billion)
- However Revenue was “only” $52.9BN, below the estimated $53.35BN (range $52.52BN to $54.09BN)
The revenue was squarely inside the company’s Q1 guidance of $51-$54BN.
More importantly, Amazon guided Q3 net sales to be between $54.0 billion and $57.5 billion (up 23%-31% vs Q3 2017), which however was well below the consensus est. $58.03B (range $55.63 billion to $59.77 billion).
Looking at Amazon’s most important segment, AWS, in Q2 it generated net sales of $6.11 billion, an increase of +49% Y/Y. By comparison, in Q1 AWS generated $5.44 billion in revenue, which also grew at a 49% rate.
On the bottom line, AWS was responsible for operating income of $1.642BN, or a 26.9% profit margin, up from 25.8% last quarter. In other words, for yet another quarter, AWS was responsible for more than half, or 55% of Amazon’s total operating income.
Amazon’s new highly profitable advertising business grew 129%, slightly down from last quarter’s 132% growth, but still a scorching rate of growth.
As Bloomberg notes, “investors are perplexed by Amazon’s results, with shares teetering in positive and negative territory in after-market trading. The outlook on revenue and guidance missed. But revenue growth from Amazon Web Services and advertising both were strong.“
Jeff Bezos was, as usual, quite optimistic, and this time pitched Alexa:
“We want customers to be able to use Alexa wherever they are,” Bezos said. “There are now tens of thousands of developers across more than 150 countries building new devices using the Alexa Voice Service, and the number of Alexa-enabled devices has more than tripled in the past year. Our partners are creating a wide variety of new Alexa-enabled devices and experiences, including soundbars from Polk and Sonos; headphones from Jabra; smart home devices from ecobee and First Alert; Windows 10 PCs from Acer, HP, and Lenovo; and cars from automakers including BMW, Ford, and Toyota.””
More to come.
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