Technology

How Amazon Knocked This Earnings Report Out of the Park

Chris Lange

Published: July 28, 2016 4:27 pm

Last Updated: January 13, 2020 5:09 am

Amazon.com Inc. (NASDAQ: AMZN) reported second-quarter financial results after the markets closed on Thursday. The company absolutely blew out earnings, with an incredible beat on the bottom line and a solid beat on the top line. Although shares initially dipped into the negative on this announcement, they have handily gained as this report settles in.

The company said that it had $1.78 in earnings per share (EPS) on $30.40 billion in revenue. There were consensus estimates from Thomson Reuters calling for $1.11 in EPS on $29.55 billion in revenue. The same period from last year had $0.19 in EPS on $23.18 billion in revenue.

In terms of guidance for the third quarter, the company expects operating income to be in the range of $50 million to $650 million and for net sales to be in the range of $31.0 billion to $33.5 billion. The consensus estimates are calling for $0.97 in EPS on $31.63 billion in revenue for the coming quarter.

During this quarter, Amazon Web Services (AWS) announced that Salesforce.com selected AWS as its preferred public cloud infrastructure provider. AWS launched its Asia Pacific (Mumbai) Region, the sixth AWS Region in Asia Pacific. With this launch, AWS provides 35 Availability Zones across 13 technology infrastructure regions globally.

Amazon Business now serves more than 400,000 businesses and generated more than $1 billion in sales in its first year. Amazon Business has more than 30,000 third-party sellers who fulfill over half of Amazon Business orders.

Jeff Bezos, founder and CEO of Amazon, commented on earnings:

It’s been a busy few months for Amazon around the world, and particularly in India — where we launched a new AWS Region, introduced Prime with unlimited free shipping, and announced that Prime Video is coming soon, offering Prime members in India exclusive access to Amazon Original Series and Movies — including original content featuring top Indian creators and talent. The team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response.

Operating cash flow increased 42% to $12.7 billion for the trailing twelve months, while free cash flow increased to $7.3 billion at the same time. On the books, cash, cash equivalents, and marketable securities totaled $16.5 billion at the end of the quarter, versus $19.8 billion at the end of 2015.

Shares of Amazon closed Thursday up 2.2% at $752.61, with a consensus analyst price target of $814.59 and a 52-week trading range of $451.00 to $757.34. Following the release of the earnings report, the stock was up 2% at $768.00 in the after-hours trading session.