Thu, Jul. 16, 1:36 PM
- Amazon (NASDAQ:AMZN) states it saw 18% more orders during yesterday's Prime Day promo than it did during last year's Black Friday, and 266% more than on the same day a year ago. Sales from 3rd-party sellers using Amazon's fulfillment services rose nearly 300% Y/Y.
- 34.4M items were sold in Prime-eligible locales, including "hundreds of thousands" of Fire TV HDMI sticks (among the items on sale). "After yesterdays results, we'll definitely be doing this again," says an Amazon VP.
- The figures come in spite of a social media backlash among Prime subs disappointed with Amazon's Prime Day discounts. "Now printing: t-shirts that read 'I stayed up late for @Amazon #PrimeDay and all I got was Tupperware,'" quips one Twitter user.
- Amazon has rallied to new highs amid a 1% Nasdaq gain. A bullish Oppenheimer note regarding AWS growth could be helping: The firm states checks point to accelerating AWS volumes (+100% Y/Y) in spite of limited price cuts over the last 9 months. "We believe Street models do not fully reflect accelerating growth from stronger volumes and easier comps. In addition, we attended the AWS Summit in NY last week and were encouraged by several product announcements, customer stats and high attendance."
- Meanwhile, rival eBay reported a 3% Y/Y Q2 drop in Marketplaces revenue this morning - forex pressures contributed, as did share loss to Amazon and others. Amazon's Q2 report arrives on July 23.
Tue, Jul. 14, 1:13 PM
- A day after Rackspace (NYSE:RAX) announced a services partnership with Microsoft related to Azure, shares are rallying in response to a CRN report stating a similar deal with Amazon Web Services (NASDAQ:AMZN) is close.
- CRN states a channel partner for both Rackspace and Amazon "approached his company with an offer to participate in a beta program in which Rackspace would manage and provide support for his customers hosting workloads in Amazon's cloud." The source: "They are going to wrap their managed 'Fanatical Support' around AWS and essentially become an Amazon reseller."
- AWS had revenue of $5.16B over the 12 months ending March 31, and (per Synergy Research) still controls nearly 30% of the global cloud IaaS/PaaS market.
- Rackspace is now up 8.5% over the last two days. Shares are still down 17% YTD.
Thu, May 21, 11:38 AM
- Two weeks after Bernstein hiked its Amazon (NASDAQ:AMZN) target to $600, Morgan Stanley's Brian Nowak has hiked his target by $70 to $520.
- Nowak thinks 2016 Street gross profit estimates are 5% too low given recent margin growth and ongoing wallet share gains; he estimates gross profit/customer will rise 7% next year. In addition, fulfillment costs/unit are falling for the first time since 2010, as Amazon slows its warehouse-building binge. Nowak sees Amazon once more stepping up its fulfillment spend in 2016, but nonetheless believes its 2016 CSOI will be 5% above consensus.
- Also: 1) Nowak believes Amazon's international losses are smaller than believed. However, a $269M 2015 international loss is still expected due to a strong dollar and Indian investments. 2) Nowak joins a chorus of analysts praising Amazon's Q1 AWS figures, while "conservatively" forecasting AWS' op. margin will fall 100 bps next year to 16% (he thinks the Street is modeling a 190 bps drop).
- Shares are $17 away from a high of $452.65 (set after last month's Q1 report), and up 40% YTD.
- Update: In other Amazon news, the company has announced its Prime Now 1-hour delivery service will start delivering goods from local stores in Manhattan. Amazon plans to expand the service to other locales later this year.
Thu, May 7, 2:52 PM
- Citing enthusiasm about the AWS figures broken out in Amazon's (NASDAQ:AMZN) April 23 Q1 report, Bernstein has hiked its target by $150 to $600, while reiterating an Outperform.
- Bernstein: "[W]e were surprised by AWS's current profitability trajectory, as our assumption had been that Amazon was investing more in sales and in R&D to drive AWS's current hyper-growth." The firm thinks the numbers suggest AWS has more pricing power than previously believed, and notes Amazon has slowed its once-manic price-cutting pace over the last 12 months. "This price discipline coupled with declining costs for computing and storage explain in part the fast margin expansion we have seen for AWS starting in 2Q15."
- Amazon stated AWS had a $265M Q1 op. profit on revenue of $1.57B, and an op. profit of $680M over the trailing 12 months via revenue of $5.16B. JPMorgan responded by valuing AWS at $66B.
- Analyst Ben Thompson in a Wednesday post: "The profitability of AWS is a big deal in-and-of itself, particularly given the sentiment that cloud computing will ultimately be a commodity won by the companies with the deepest pockets ... Amazon is clearly reaping the benefits of scale from being the largest player, and their determination to have both the most complete and cheapest offering echoes their prior strategies in e-commerce."
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
Fri, Apr. 24, 9:17 AM
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, 5:39 PM
Thu, Apr. 23, 4:06 PM| Thu, Apr. 23, 4:06 PM | 43 Comments
Mon, Mar. 30, 12:07 PM
- Four months after the company started promoting local services to its customers, Amazon (AMZN +0.8%) has launched a Home Services site with the help of partners such as TaskRabbit, Pep Boys, and TakeLesons. Market leader Angie's List (ANGI -4.6%) isn't reacting well to the news.
- Amazon exec Peter Faricy: "We have 85 million Amazon customers who have shopped for products this past year that often require a service afterwards." 700 services are initially supported; much like Angie's List, Amazon argues it helps connect consumers with trustworthy businesses. Only 3 out of every 100 professionals in each metro are said to be accepted, with Amazon making sure each business is licensed, insured, and passes a background check.
- The e-commerce giant also claims it only takes 60 seconds for a customer to buy a service. Faricy: "We have standardized and prepackaged all of our service offerings. So you know exactly what is going to be done and how much it’s going to cost you, up front, no surprises."
- 41 states are currently supported; Amazon wants to provide strong coverage across the 30 biggest U.S. metro areas. The Verge notes a beta version of Amazon's site suggests the company is taking a 20% cut on standard services, 15% on custom services, and 10% on recurring services.
Tue, Mar. 10, 12:51 PM
- ChannelAdvisor (ECOM -3.6%) clients saw their Amazon (AMZN -2.1%) same-store sales rise 22.7% Y/Y in February. That's down from January 27%, and also below the growth seen during 9 of the prior 10 months (December being the exception). Growth peaked at 45.1% in August.
- 38% of tracked Amazon sales relied on Amazon's fulfillment services (FBA), up from 32.2% a year earlier. 2.3% of sales relying on FBA involved non-Amazon transactions. Amazon stated in its Q4 report 3rd-party sellers using FBA grew 65% in 2014, and made up over 40% of Q4 3rd-party units.
- eBay (EBAY -2.5%) continues to lose share: Its ChannelAdvisor same-store sales grew 5.1% in February, down from January's 6.8% and below total U.S. e-commerce growth of 15% (per comScore) - auctions -26.2%, fixed-pride +8.6%, Motors +25.2%. eBay is coming off a Q4 in which its Marketplaces GMV only rose 2% Y/Y (3% U.S. growth, 1% international).
- Search ad-based same-store sales (largely involving Google ads) rose 10.7%, with rising clicks and orders offsetting declining ad prices. Google Shopping-related (NASDAQ:GOOG) same-store sales grew 20.7%.
- Amazon and eBay are both underperforming on a down day for equities. Amazon's volume has been below-average, and eBay's above-average.
Wed, Mar. 4, 1:58 PM
- A day after slumping to new post-IPO lows and coming within $0.03 of $80, Alibaba (NYSE:BABA) has seen dip-buyers emerge in large numbers. Naturally, Yahoo (NASDAQ:YHOO) is along for the ride.
- The gains come as a Chinese publication reports Jack Ma once said he considered acquiring Yahoo, which plans to spin off its Alibaba stake into a publicly-traded company in Q4. Ma's alleged comments: "The acquisition of Yahoo is something I worked [on] a couple of years ago, this is a political problem, not an economic problem, Yahoo is a media [company], more sensitive."
- There has already been speculation Alibaba will try to buy Yahoo's spinoff (much less politically challenging than buying the whole of Yahoo) at some point. Bloomberg's Matt Levine has noted the spinoff will have to wait a year before a deal occurs, in order to maintain its tax-free status.
- Meanwhile, Alibaba's Aliyun cloud services unit (a giant in the Chinese cloud infrastructure market) has opened a Silicon Valley data center, its first in the U.S. For now, the data center will cater to Chinese companies with U.S. operations, but it plans to go after non-Chinese clients later this year. When it does, Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and a slew of other incumbents will be waiting.
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
Fri, Jan. 30, 9:12 AM
Thu, Jan. 29, 5:35 PM
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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