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Amazon's (AMZN) Higher Margins a Key Highlight of Q2 Earnings
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Amazon (AMZN - Free Report) just released its latest quarterly results, posting diluted earnings of $5.07 per share and revenues of $52.9 billion.
AMZN’s EPS performance more than doubled our Zacks Consensus Estimate of $2.49, and represented an astounding twelve-fold increase over year-ago levels. Revenue lagged behind our $53.45 billion projection, but is still a 39% year-over-year increase.
Operating cash flow increased 22% to $21.8 billion for the trailing twelve months, compared with $17.8 billion during the same period a year ago. Free cash flow increased to $10.4 billion, compared to $9.6 billion previously.
“The fourth annual Prime Day was Amazon’s biggest global shopping event ever, welcoming more new Prime members on July 16th than any other previous day in Amazon history," Amazon boasted in its earnings statement. "Members purchased more than 100 million products, and the best-selling items worldwide were the Fire TV Stick with Alexa Voice Remote and Echo Dot. Small and medium-sized businesses selling on Amazon exceeded $1.5 billion in sales during the Prime Day event.”
AMZN saw the strongest revenue performance across its North American and cloud-computing (AWS) segments. North American sales surged 44% year-over-year, notably higher than the reported 27% boost internationally. Considering that North America accounts for nearly two-thirds of Amazon’s total revenue, this growth is a welcome sign that the company’s operations are continuing to bear fruit.
Once again AWS was the star of the report, with its revenues soaring 49% year-over-year to reach $6.1 billion. While most of the firm’s operations bear single-digit margins, AWS posted an operating margin of 26.9%, representing a new all-time high.
Amazon’s overall operating margin was 5.6%, which is low by typical standards, but is twice that of year-ago levels. Amazon is known for reinvesting most of its earnings directly into operations, which is why Wall Street is more lenient toward the firm’s figures.
Amazon expects revenues of between $54 billion and $57.5 billion in Q3, which is about 23% to 31% higher than year-ago figures. However, investors should note that this range falls below the current Zacks Consensus Estimate of $58.24 billion. This figure could also change as analysts digest the news. The guidance anticipates an unfavorable impact of approximately 30 basis points due to foreign exchange rates.
Shares of Amazon were as much as 5% higher in after-hours trading before settling at around 3.5%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Amazon's (AMZN) Higher Margins a Key Highlight of Q2 Earnings
Amazon (AMZN - Free Report) just released its latest quarterly results, posting diluted earnings of $5.07 per share and revenues of $52.9 billion.
AMZN’s EPS performance more than doubled our Zacks Consensus Estimate of $2.49, and represented an astounding twelve-fold increase over year-ago levels. Revenue lagged behind our $53.45 billion projection, but is still a 39% year-over-year increase.
Operating cash flow increased 22% to $21.8 billion for the trailing twelve months, compared with $17.8 billion during the same period a year ago. Free cash flow increased to $10.4 billion, compared to $9.6 billion previously.
“The fourth annual Prime Day was Amazon’s biggest global shopping event ever, welcoming more new Prime members on July 16th than any other previous day in Amazon history," Amazon boasted in its earnings statement. "Members purchased more than 100 million products, and the best-selling items worldwide were the Fire TV Stick with Alexa Voice Remote and Echo Dot. Small and medium-sized businesses selling on Amazon exceeded $1.5 billion in sales during the Prime Day event.”
AMZN saw the strongest revenue performance across its North American and cloud-computing (AWS) segments. North American sales surged 44% year-over-year, notably higher than the reported 27% boost internationally. Considering that North America accounts for nearly two-thirds of Amazon’s total revenue, this growth is a welcome sign that the company’s operations are continuing to bear fruit.
Once again AWS was the star of the report, with its revenues soaring 49% year-over-year to reach $6.1 billion. While most of the firm’s operations bear single-digit margins, AWS posted an operating margin of 26.9%, representing a new all-time high.
Amazon’s overall operating margin was 5.6%, which is low by typical standards, but is twice that of year-ago levels. Amazon is known for reinvesting most of its earnings directly into operations, which is why Wall Street is more lenient toward the firm’s figures.
Amazon expects revenues of between $54 billion and $57.5 billion in Q3, which is about 23% to 31% higher than year-ago figures. However, investors should note that this range falls below the current Zacks Consensus Estimate of $58.24 billion. This figure could also change as analysts digest the news. The guidance anticipates an unfavorable impact of approximately 30 basis points due to foreign exchange rates.
Shares of Amazon were as much as 5% higher in after-hours trading before settling at around 3.5%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>