tl;dr
Amazon (NASDAQ:AMZN) shares are climbing in after-hours trading on the heels of better-than-expected results for Q1, including a beat on the company’s Amazon Web Services segment. Gains have been curbed, however, by Q2 sales guidance which missed estimates by as much as $6B. The commerce and cloud c...
Amazon (NASDAQ:AMZN) shares are climbing in after-hours trading on the heels of better-than-expected results for Q1, including a beat on the company’s Amazon Web Services segment. Gains have been curbed, however, by Q2 sales guidance which missed estimates by as much as $6B. The commerce and cloud computing behemoth earned a profit of $0.98 per share, beating expectations by 15 cents. Total revenue increased by 13% to $143.3B versus expectations of $142.55B. Operating income increased 218% to $15.3B year-over-year. Free cash flow improved to an inflow of $50.1B versus an outflow of $3.3B for the 12 months ended March 31, 2023. Less equipment finance leases and principal repayments, free cash flow improved to an inflow of $48.8B vs $45B outflow. For the pivotal AWS business, revenue increased 17% to $25B versus estimates for 14.7% growth. “The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate now at a $100B annual revenue run rate,” CEO Andy Jassy said. The company plans to expand AWS’s infrastructure footprint with plans to launch infrastructure regions in Saudi Arabia and Mexico, a planned investment of $10B to build two data center complexes in Mississippi, and the general availability of new AWS Local Zones in Atlanta, Chicago, and Houston. Sales at the company’s online stores increased by 7% while physical stores saw a 6% gain in sales. Third party seller services saw 16% growth while ad sales were up 24%. Subscription services sales increased 11%. North America segment sales increased 12% to $86.3B while international sales were up 10% to $31.9B. Excluding the impact from foreign exchange, international sales were up 11%. For Q2, Amazon (AMZN) expects revenue to be between $144B to $149B missing expectations of $150.1B. Q2 sales incorporates an unfavorable impact of ~60 basis points from foreign exchange rates. Operating income is expected to increase to $10B-$14B from $7.7B in Q2 2023. A conference call is scheduled for Tuesday at 2:30pm PT/5:30pm ET. Analyst Reactions: Seeking Alpha analyst Yuval Rotem said Amazon’s results were everything investors expected (except for a wishful thinking dividend). With AWS accelerating to 17%, and advertising growing over 24%, Amazon delivered on key numbers and gained market share, while achieving record profitability. Even if guidance came slightly below, I still view Amazon as one of the most attractive margin expansion stories in the market. Seeking Alpha analyst Dan Victor also said the company delivered a solid beat to growth and earnings estimates consistent with a strong economic backdrop in Q1. The question now turns to how those macro conditions evolve going forward as inflation remains a concern and interest rates continue to climb. The stock may be challenged to reclaim its recent high if the outlook for the global economy turns more challenging.
More about Amazon.com Inc
Company: Amazon.com Inc
Industry: Trade & Services, Retail-Catalog & Mail-Order Houses
Market Cap: 188.24 Billion
PE Ratio: 62.4
Dividend Yield: None
EPS: 2.9
52-Week High: 55.78
52-Week Low: 0.0529
Avg. Volume: 574,784,995,000
Price: 198.71
Change: 50.69
Change %: 0.139
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