Amazon Revenue Exceeds Expectations: 5 Metrics to See

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Amazon.com (NASDAQ: AMZN) reported strong second quarter 2020 results after the market closed on Thursday. Shares are up 4.8% during Thursday’s after-hours trading session at 5:27 p.m. EDT.

We can attribute the market’s joy to the fact that the global leader in e-commerce and cloud computing echoed the consensus Wall Street estimates, both above and below. Its revenue forecast for the third quarter also exceeded analysts’ expectations. Here’s a look at the tech giant’s quarter, along with its forecast.

1. Revenue increased by 40%

Amazon’s quarterly net sales jumped 40% year-over-year to $ 88.9 billion, easily exceeding the $ 81.5 billion expected by Wall Street. The company has sailed within its forecast range of $ 75 billion to $ 81 billion. Excluding the negative impact of currency exchange, sales increased by 41%.

As a reminder, in the first quarter, Amazon’s revenue grew 26% year-over-year (27% at constant exchange rates) to $ 75.5 billion.

Here’s how revenue was broken down by segment:

Segment Q2 2020 revenue Change (YOY)
North America $ 55.4 billion 43%
International $ 22.7 billion 38%
Services Web Amazon (AWS) $ 10.8 billion 29%
Total $ 88.9 billion 40%

Data source: Amazon. YOY = year after year.

The company’s e-commerce business, particularly in North America, has benefited from a strong tailwind from the COVID-19 pandemic.

2. Operating profit climbed 89%

Operating profit rose 89% year-over-year to $ 5.8 billion, crushing Amazon’s forecast of an operating loss of $ 1.5 billion to an operating gain of $ 1.5 billion. This was a particularly impressive feat given that the company incurred more than $ 4 billion in additional costs related to COVID-19, as expected. (He had guided “about $ 4 billion” in additional costs related to the pandemic.)

Segment Q2 2020 operating profit Change (YOY)
North America $ 2.1 billion 37%
International $ 345 million N / A. Improvement of $ 946 million from a loss of $ 601 million last year.
AWS $ 3.4 billion 58%
Total $ 5.8 billion 89%

Data source: Amazon. YOY = year after year.

All three segments performed well, with cloud computing service AWS having a particularly profitable quarter. The pandemic has led to an increase in internet traffic, as many more people than usual work from home and otherwise stay there. This has been a positive wind for cloud service companies.

While North America has performed very well given the pandemic, its operating profit performance has not been as robust as the 37% year-over-year growth figure might. to suggest. The segment’s operating profit a year ago has been drastically reduced by Amazon spending to take its primary two-day Prime free shipping benefit to one.

3. BPA soared 97%

Net income has doubled year on year to reach $ 5.2 billion. This translated into earnings per share (EPS) growth of 97% to $ 10.30. Wall Street was chasing EPS of $ 1.46, so Amazon’s result crushed that expectation.

4. Cash flow from operations increased by 42% in the last 12 months

Operating cash flow jumped 42% year over year to $ 51.2 billion in the past 12 months. Free cash flow increased 28% to $ 31.9 billion.

5. Revenue is expected to increase 24% to 33% in the third quarter

For the third quarter, Amazon guided for net sales of between $ 87 billion and $ 93 billion, growing 24% to 33% year-over-year. This outlook has exceeded Wall Street’s estimate of $ 86.3 billion.

The company expects operating profit of between $ 2 billion and $ 5 billion, up from $ 3.2 billion a year ago. This direction involves more than $ 2 billion in costs related to COVID-19.

In short, Amazon had a fantastic quarter.



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