Thu, Oct. 22, 5:42 PM
- Amazon Web Services had Q3 revenue of $2.09B, +15% Q/Q and +78% Y/Y. Annual growth slowed just slightly from Q2's 81%, and remained well above Q1's 49%. Segment op. profit rose over 5x Y/Y to $521M.
- North American revenue (excluding AWS) was also strong, rising 28% Y/Y to $15B after having grown 26% in Q2. The segment had a $528M op. profit, after seeing a $60M loss a year ago. Media revenue +9%, electronics/general merchandise (EGM) +35%.
- International revenue rose 7% Y/Y (24% exc. forex) to $8.3B, after rising 3% in Q2. Segment op. loss narrowed to $56M from $174M. Media revenue -8%, EGM +14%.
- Financials: Gross margin (boosted by AWS and 3rd-party sales) was 33.9%, down from 34.6% in Q2 but up from 30.7% a year ago. Fulfillment spend +22% Y/Y to $3.2B, marketing +27% to $1.3B, tech/content +32% to $3.2B, G&A +14% to $463M. Trailing 12 month op. cash flow +72% Y/Y to $9.8B. Amazon ended Q3 with $14.4B in cash/investments, and $8.2B in long-term debt.
- AMZN +10.7% to $624.50, making new highs in the process.
- Q3 results/Q4 guidance, PR
Thu, Oct. 22, 4:04 PM
Wed, Oct. 21, 5:35 PM
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Fri, Jul. 24, 1:40 PM
- Not surprisingly, analysts are rushing to hike their Amazon (NASDAQ:AMZN) targets as shares jump following a Q2 beat fueled in part by an 81% Y/Y increase in AWS revenue. Barclays and B. Riley have upgraded to bullish ratings; several firms were prescient enough to upgrade prior to earnings. Amazon has given back some of yesterday's AH gains; its market cap is at $251B.
- In addition to AWS growth, Amazon's 390 bps Y/Y gross margin improvement is drawing attention. FBN's Shebly Seyrafi (Outperform) attributes the gains to AWS, 3rd-party seller unit growth (45% of paid units vs. 41% in Q1 and a year ago), and lower shipping costs (4.1% of revenue vs. 4.4% in Q1 and 4.8% a year ago). Credit Suisse's Stephen Ju (Outperform) also thinks favorable Japanese comps helped, while adding the Prime price hike and past warehouse investments are cutting shipping loss margins.
- Mizuho's Neil Doshi (Buy): "Revenue growth (ex-FX) accelerated to 27% YoY vs. 21% YoY in 1Q, which marked the strongest growth we’ve in about 3 years. Gross Margins reached a record high of ~35%, and CSOI margin was 4.6%; the strongest we’ve seen since 1Q11. While Amazon continues to invest in the biz, the flywheels are kicking in – Prime subscribers are transacting more on Amazon, while investments in FCs, 3P and AWS are helping to drive margins higher.”
- SunTrust's Bob Peck (Neutral) cautions Amazon's spending history could mean recent margin/profit improvements will be short-lived. "Amazon has a history of 'giving back' operational efficiencies to consumers via lower prices, as well as aggressively investing to drive long- term [free cash flow] growth. Key initiatives include 1) marketplace, particularly on adding fulfillment centers, increasing [fulfillment] for 3P sellers, and expanding in India; 2) Prime, especially on adding content and expanding Prime Now; 3) AWS, adding new features/functionality as well as geographic expansion (new region in India). As a result, we expect margins to trend lower from 4Q’15 onward.”
- On the earnings call (transcript), new CFO Brian Olsavsky stated paid units rose 22% Y/Y, and active customer accounts by 7M Q/Q to 285M. When asked about AWS' growth pickup, he noted major price cuts carried out in Q2 2014 led to favorable comps.
- Prior Amazon coverage
Thu, Jul. 23, 4:46 PM
- Amazon Web Services (NASDAQ:AMZN) had Q2 revenue of $1.82B, +16% Q/Q and +81% Y/Y. Annual growth accelerated sharply from Q1's 49%. AWS segment op. profit rose over 5x Y/Y to $391M.
- Regional/segment performance: North American revenue (excludes AWS) +26% Y/Y to $13.8B; op. profit +114% to $703M. International revenue +3% to $7.6B (+22% exc. forex); op. loss of $19 vs. $2M a year ago. North American Electronics and General Merchandise (EGM) revenue +31% to $10.99B; Media +6% to $2.62B. International EGM revenue +10% to $5.43B; Media -12% to $2.09B.
- Financials: Gross margin (boosted by AWS and 3rd-party seller growth) rose to 34.6% from 32.2% in Q1 and 30.7% a year ago, giving a lift to EPS. Fulfillment spend +21% Y/Y to $2.88B; marketing +22% to $1.15B; tech/content +36% to $3.02B; G&A +24% to $467M. Trailing 12 months (TTM) op. cash flow +69% to $8.98B. Amazon ended Q2 with $14B in cash/investments, and $8.3B in long-term debt.
- Shares have surged to $570.59 AH, easily taking out their old highs and leading Amazon's market cap to surpass Wal-Mart's. The firms that upgraded ahead of earnings are looking smart.
- Q2 results, PR
Thu, Jul. 23, 4:13 PM
- Amazon (NASDAQ:AMZN): Q2 EPS of $0.19 beats by $0.33.
- Revenue of $23.18B (+19.9% Y/Y) beats by $790M.
- Expects Q3 revenue of $23.3B-$25.5B (+13%-24% Y/Y) vs. a $23.89B consensus.
- Expects Q3 op. income of -$480M to $70M. Guidance assumes $580M in stock compensation and amortization expenses.
- Shares +16.1% AH
- Press Release
Wed, Jul. 22, 5:35 PM
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Fri, Apr. 24, 12:39 PM
- Janney, JPMorgan, and Raymond James have upgraded Amazon (NASDAQ:AMZN) after the company beat Q1 estimates on the back of a 24% Y/Y increase in North American segment revenue, guided in-line, and (importantly) reported AWS had a $265M Q1 op. profit on revenue of $1.57B ($680M and $5.16B for the trailing 12 months). At least 7 other firms have hiked their targets. Amazon's market cap is at $181.6B.
- JPMorgan's Doug Anmuth (upgrade to Overweight, $535 target) now values AWS at $66.3B, or 16x estimated 2016 EBITDA. "[W]e think the reported profitability level far exceeded virtually all expectations. CSOI margins of 17% in 1Q15 and 14% in 2014 have been driven by increasing scale and greater utilization, along with additive services beyond core EC2 and S3 [computing and storage] services. When factoring in heavy depreciation, AWS has EBITDA margins of around 50%."
- Janney's Shawn Milne (upgrade to Buy): "AWS segment margins of 16.9% in Q1, 14.2% in FY14 — well ahead of general Street thoughts that AWS was in 'investment mode,' and losing 5-10% (or more)." He does note Amazon's North American retail op. margin fell to 2.5% in 2014 from 2.8% in 2013 (thanks largely to the Fire Phone debacle), but adds it rebounded to 3.9% in Q1.
- Raymond James' James Kessler (upgrade to Outperform) focuses on Amazon's total margin improvement. "Non-GAAP operating margin of 3.1% was ~100 bp above our/consensus estimates driven by improved gross margins and modestly lower than expected operating expenses. Amazon also guided 2Q margins above consensus at the high end."
- On SA, Brian Nichols argues AWS would be worth $50B at 45x forward op. income, and thinks the business could be valued at $85B if publicly traded by itself. The Panoramic View: "Facebook and other leading tech companies used to garner a 10x revenue valuation when they were in similar stages of development. I think that the same can be applied to AWS."
- On the CC (transcript), Amazon stated active customer accounts rose by 8M Q/Q to 278M (260M paying customers). Y/Y paid unit growth was steady at 20%, and 3rd-party sellers made up 44% of sales vs. 43% in Q4.
- Prior Amazon earnings coverage
Thu, Apr. 23, 5:46 PM
- In its first quarter of breaking out Amazon Web Services' performance, Amazon (NASDAQ:AMZN) states the cloud infrastructure giant had Q1 revenue of $1.57B (+49% Y/Y) and (in spite of AWS' aggressive pricing) an op. profit of $265M (+8%).
- Driving the Q1 revenue beat: North American revenue (not counting AWS) rose 24% to $13.4B, with segment op. profit totaling $517M - media +5%, electronics/general merchandise +31%. On the other hand, international revenue fell 2% to $7.7B; sales would've risen 14% if not for forex. International media -12%, EGM +4% . The segment had a $76M op. loss.
- With the help of AWS and 3rd-party seller growth, gross margin rose to 32.2% from 28.8% a year ago. Fulfillment spend +19% to $2.8B, marketing +24% to $1.1B, tech/content +38% to $2.8B, G&A +31% to $427M.
- Free cash flow for the trailing 12 months rose to $3.16B from $1.94B at the end of Q4 and $1.49B a year earlier. Q2 op. profit/loss guidance assumes $600M in stock compensation and amortization costs.
- AMZN +6.7% AH to $415.95, taking out its old highs along the way.
- Q1 results, PR
Thu, Apr. 23, 4:06 PM| Thu, Apr. 23, 4:06 PM | 43 Comments
Wed, Apr. 22, 5:35 PM
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Wed, Feb. 18, 12:15 PM
- Down AH yesterday due to the light sales guidance provided with its mixed Q4 results, Rackspace (RAX +1.4%) is now back above $50. Helping its cause: Pac Crest has upgraded to Outperform, and at least four firms have hiked their targets.
- Pac Crest cites enterprise and OpenStack momentum as reasons for upgrading: "In the second half of 2014, Rackspace won more large enterprise contracts worth at least $100,000 per month than it had in the prior five quarters combined ... management indicated that OpenStack now makes up more than 50% of its public cloud revenue, which implies OpenStack revenue is at least 15.6% of its total revenue."
- Cowen (target hiked to $75) now considers it likely Rackspace "will announce support for a mega cloud provider in 1H15," thereby boosting its long-term addressable market and lowering future capex needs (in exchange for sharing revenue). It adds sales guidance was in-line after adjusting for forex, and that EBITDA margin guidance was better than expected.
- Meanwhile, new CEO Taylor Rhodes argues the cloud infrastructure (IaaS) market's price war is calming down. "Amazon Web Services (NASDAQ:AMZN) in November, for the first time, didn’t make a price cut move ... AWS is feeling like they are the reference brand leader, that they are strong versus Google (NASDAQ:GOOG), so they don’t need to do it as much. Microsoft (NASDAQ:MSFT) is cutting price, but who knows how much share they are actually taking."
- He also reiterates Rackspace's assertion that its OpenStack/hybrid cloud offerings are differentiated in the battle for enterprise accounts. "The mainstream market has two problems: They have legacy apps that won’t go [to multi-tenant public clouds] automatically ... the second problem they have is this skills set gap ... There is a need for software and tools development."
- Q4 results, guidance/details
Fri, Jan. 30, 2:24 PM
- Amazon's (AMZN +14.8%) Q4 North American op. margin of 5.4% was its highest in three years, notes SunTrust's Robert Peck, reiterating a Buy and upping his target to $370. Peck is also pleased gross margin rose Q/Q in spite of seasonality, even if one backs out Other (i.e. AWS) revenue. Third-party seller and fulfillment service growth drove the gains, as did improved efficiency.
- Topeka's Victor Anthony likes the fact Prime memberships rose 53% in 2014 (no precise subscriber number has been given, as usual) in spite of Amazon's $20 price hike. Benchmark's Daniel Kurnos observes the bulk of Amazon's Q4 revenue miss was due to its international ops, where the company took an $895M forex hit.
- B. Riley's Scott Tilghman (Neutral) is more cautious. "We aren’t convinced the company has the same leverage opportunity in non-holiday quarters, and this seems to be captured in its 1Q guidance, which assumes bigger FX headwinds and lower Y/Y profit." On SA, Paulo Santos is as bearish as ever, citing (among other things) the top-line miss and a 4% drop in Media revenue.
- During the CC (transcript), CFO Tom Szkutak stated Amazon would begin breaking out AWS revenue for the first time in Q1. He also mentioned (giving encouragement to bulls) Amazon is "putting even more energy and attention on driving what we would call fixed expense and variable expense productivity as well as other efficiency projects."
- Also disclosed: Third-party seller units made up 43% of Q4 unit sales, up from Q3's 42%. Annual paid unit growth slipped to 20% from Q3's 21%.
- Prior Amazon earnings coverage
Thu, Jan. 29, 5:05 PM
- Amazon (NASDAQ:AMZN) expects Q1 revenue of $20.9B-$22.9B (+6%-16% Y/Y), below a $23.05B consensus. Op. income guidance is at -$450M to $50M, and includes $450M in stock compensation and amortization costs.
- Revenue growth fell to 15% in Q4 from 20% in Q3, with North American sales (64% of total) rising 22% and international only 3%. International would've been up 12% if not for forex.
- Media revenue fell 4% Y/Y in Q4 to $6.95B (international -8%, North America +1%). But electronics/general merchandise rose 21% to $20.6B (international +10%, North America +27%).
- Other revenue (dominated by AWS) rose 26% Q/Q and 41% Y/Y to $1.74B. AWS usage was up nearly 90% Y/Y, and active customers now top 1M.
- Contributing to the EPS beat: Gross margin rose to 29.5% from 26.5% a year ago. Also helping: While fulfillment spend rose 17% Y/Y to $3.4B, that's a much slower pace than Q3's 30%. Marketing spend +35% to $1.5B; tech/content +42% to $2.6B; G&A +39% to $442M. Op. margin was 2%, even with a year ago.
- Third-party sellers using Amazon's fulfillment services rose over 65% Y/Y in 2014 (share gains against eBay), and accounted for over 40% of Q4 third-party units.
- Shares have risen above $336 AH.
- Q4 results, PR
- Update (6:32PM): Amazon is now up 14.2% AH.
Thu, Jan. 29, 4:03 PM
Wed, Jan. 28, 5:35 PM
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Amazon.com Inc is an online retailer. The Company sells its products through the website which provides services, such as advertising services and co-branded credit card agreements. It also offers electronic devices like Kindle e-readers and Fire tablets.
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