Amazon’s stock jumped more than 3% in extended trading on Thursday, after the company reported first-quarter earnings that exceeded Wall Street’s expectations. Here’s how the e-commerce behemoth did in comparison to Refinitiv’s analyst estimates:
Earnings per share: $15.79 vs. $9.54 predicted
$108.52 billion in revenue vs $104.47 billion forecast
Few businesses have gained as much as Amazon, from the pandemic-driven boom in online shopping. Sales jumped 44 percent year over year to $108.5 billion in the company’s first quarter, indicating that the pandemic continues to boost the company’s revenue. Amazon’s second-quarter outlook suggests that the company expects the momentum to continue, which could assuage investor concerns, that business will slow in the aftermath of the pandemic. The company expects sales of between $110 billion and $116 billion, above the $108.6 billion forecasted by Wall Street.
Importantly, Amazon announced in its guidance that Prime Day will be held in June this year, which will aid sales comparisons in the second quarter. Normally, Amazon’s annual two-day sale bonanza takes place in July, but due to pandemic-related uncertainty, the event was pushed back to October last year. “In certain places, July is vacation month, so it could be easier for buyers, sellers, and vendors to experiment with a different time period,” CFO Brian Olsavsky said during a call with investors when asked about the Prime Day timing. “We assume that later in [the second quarter] will be a great time, so that’s what we’re experimenting with this year.”
Amazon’s cloud storage and advertising services are continuing to grow outside of its core retail market. During the quarter, Amazon Web Services reported net revenues of $13.5 billion, up 32% year over year. Amazon does not report advertisement income, but it is included in the company’s “Other” division, which grew 77 percent year over year to $6.9 billion in revenue. Amazon CEO Jeff Bezos also offered a rare insight at how the company’s streaming service, Prime Video, did during the pandemic, when sick people turned to the internet for entertainment. The company’s Prime subscription service includes Prime Video as a feature.
“As Prime Video celebrates its 10th anniversary, more than 175 million Prime members have streamed shows and movies in the past year, with viewing hours up more than 70% year over year,” Bezos said in the earnings statement. A year’s subscription to Amazon Prime costs $119 and comes with a slew of perks, including free two-day delivery. Bezos announced earlier this month that Amazon currently has 200 million Prime users, up from 150 million at the beginning of 2020.
Revenue from physical retailers has continued to decline, including Whole Foods Market and other brick-and-mortar offerings including Amazon Books. To $3.9 billion, sales fell 16%. Online distribution, according to Olsavsky, is not included in the list. Amazon’s foreign revenues increased more than those in North America during the quarter. More than any other segment, international revenue increased by 60% year over year, while revenue in North America increased by 40%.
Amazon will save money on coronavirus protection measures this year, as predicted. In the second quarter, operating income is expected to range from $4.5 billion to $8 billion, assuming $1.5 billion in Covid-19 expenses. Last quarter, Amazon executives expected the same thing. Amazon announced on Wednesday, that it would invest over $1 billion to raise salaries for over half a million of its employees in the United States. Olsavsky told analysts on a conference call that the company chose to shift the pay raise from the fall to this spring because the pandemic’s volume is still as high as it was at the start.
Olsavsky would not comment on Amazon’s CEO succession plans, which will begin in the third quarter when Jeff Bezos steps down. Bezos will hand over the reins to AWS CEO Andy Jassy and join Amazon’s board of directors as executive chairman.
