We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Amazon.com (AMZN - Free Report) reported fourth-quarter 2021 earnings of $27.75 per share, which surpassed the Zacks Consensus Estimate of $3.89 per share. The bottom line significantly increased 96.9% year over year and from $6.12 per share reported in the previous quarter.
Net sales of $137.4 billion rose 9% year over year and 24% sequentially. Notably, the figure was within the management’s guidance of $130-$140 billion. However, it missed the Zacks Consensus Estimate of $137.9 billion.
North America revenues (60% of sales) rose 9% from the year-ago quarter to $82.4 billion. International revenues (27% of sales) declined 1% year over year to $37.3 billion. Amazon Web Services (“AWS”) revenues (13% of sales) rose 40% year over year to $17.8 billion.
Solid AWS momentum contributed well to top-line growth of the company.
The robust performance delivered by Amazon during the holiday season drove top-line growth. Notably, it witnessed record-breaking sales during Black Friday and Cyber Monday on which apparel, beauty, home and toys were the top-selling categories.
Strengthening relationships with third-party sellers, especially small and medium-sized businesses (SMBs), remained a major positive. During the holiday season, more than 130,000 sellers worldwide exceeded sales of $100,000 on Amazon store. Sellers in the United States sold an average of 11,500 items per minute during Black Friday and Christmas. The company witnessed huge success in the Great Indian Festival sales event, in which around 30,000 sellers generated sales above $100,000.
All these factors led to year-over-year growth of 11% in sales generated by third-party seller services, which stood at $30.3 million in the reported quarter.
Strong momentum across Prime members remained another positive. The company witnessed strong growth in its subscription services in the reported quarter. Sales from the services went up 15% from the prior-year quarter to $8.12 billion.
Expanding physical presence was a tailwind. Sales from physical stores grew 17% year over year to $4.7 billion.
Additionally, strengthening smart device offerings continued to benefit the company’s fourth-quarter performance.
However, the company witnessed softness in the online store sales, which decreased 1% year over year to $66.1 billion. Unfavorable foreign exchange rates were other concerns.
Uncertainties related to the coronavirus pandemic, foreign exchange fluctuations, changing customer preferences, labor shortages in the market and supply-chain disruptions remain overhangs for the company.
Nevertheless, Amazon’s strong global presence, growing Prime momentum, robust data center network and an increasing number of AWS regions, improving Alexa skills, expanding smart devices portfolio, and growing efforts toward gaining strong traction among small and medium businesses are likely to drive its near-term financial performance.
Growing capabilities in grocery, pharmacy, Amazon Care, Kuiper and Zoox remain other positives.
Notably, Amazon has announced a price hike for the monthly and annual subscriptions of Prime.
Shares of the company have risen 10.9% in the pre-market trading, which can be primarily attributed to the robust performance of AWS in the fourth quarter and the Prime price hike.
Amazon.com, Inc. Price, Consensus and EPS Surprise
The company continued to make strong efforts toward bolstering its Prime program and the retail business.
Amazon’s rising investment in the expansion of its quick delivery services such as Free Same-Day Delivery and Faster Same-Day Delivery services across the world continued to drive its momentum among Prime shoppers. Notably, Free Same-Day Delivery is currently available in more than 90 metro areas in the United States and 58 metro areas in Europe. It is also available in Tokyo, Japan. Further, Faster Same-Day Delivery is available in 24 metro areas in the United States at present.
In addition to these, the growing adoption of Amazon’s cashier-less technology remained positive. Starbucks opened a “pickup cafe” with Amazon Go store in New York City, which allows customers to order food or beverages for pickup through the Starbucks app and collect them from the Amazon Go store.
In London, Sainsbury's, one of the largest supermarket chains in the U.K., opened a SmartShop Pick & Go store, leveraging the Just Walk Out technology of Amazon.
Amazon’s partnership with Affirm to offer buy now, pay later flexibility continued to drive its customer momentum.
Apart from these, expanding original content and the overall content portfolio on Prime Video continued to accelerate Prime engagement.
We note that Prime Video streamed series named The Wheel of Time, Harlem, Fairfax and the final season of The Expanse in the fourth quarter.
Also, original movies, Being the Ricardos and The Tender Bar, premiered on Prime Video in the fourth quarter.
Prime Video streamed 28 local originals internationally. Maradona: Blessed Dream (Argentina), Burning (Australia), Inside Edge Season 3 (India), and The Ferragnez - The Series (Italy) are few among them.
The company’s growing momentum in live sports streaming was another positive. Prime Video had the strongest viewership for live sports in the fourth quarter, with the 2021-2022 Thursday Night Football season, which delivered the highest average minute audience. Also, the Manchester United vs. Arsenal soccer game on Dec 2, 2021, became the most-watched Premier League match ever.
Additionally, the strengthening momentum of Amazon Music contributed well.
Expanding AWS Portfolio: A Key Catalyst
AWS, which witnessed strong top-line growth, continued to gain customer momentum in the fourth quarter, courtesy of its highly reliable services portfolio.
In the fourth quarter, Amazon unveiled a visual development environment — AWS Amplify Studio — which enables web application user interface creation with minimal coding.
The company introduced AWS Private 5G, which enables enterprises to deploy and scale their 5G mobile network seamlessly.
AWS announced a managed service called AWS IoT FleetWise, which helps collect and transfer data from millions of vehicles to the cloud in real-time cost-efficiently.
It announced AWS IoT TwinMaker, which helps in the quick creation of digital twins of devices, equipment and processes.
The company unveiled three Amazon Elastic Compute Cloud (Amazon EC2) instances, namely C7g, Trn1 and Im4gn/Is4gen/I4i.
It announced four storage services and capabilities — Amazon Simple Storage Service Glacier Instant Retrieval, Amazon FSx for OpenZFS, Amazon EBS Snapshots Archive and AWS Backup.
AWS introduced six capabilities for Amazon SageMaker, namely Canvas, Ground Truth Plus, Studio, Training Compiler, Inference Recommender and Serverless Inference.
The company unveiled a managed wide area network (WAN) service, namely AWS Cloud WAN, which aids in the seamless development, management, operation and monitoring of a global network with the help of a central dashboard.
It also announced the general availability of Babelfish for Amazon Aurora PostgreSQL-Compatible Edition, which helps run Microsoft SQL Server applications on Amazon Aurora seamlessly.
The company rolled out AWS Mainframe Modernization, which aids in the quick migration of mainframe and legacy workloads to the cloud.
It introduced serverless options for Amazon Redshift, Amazon Managed Streaming for Apache Kafka, and Amazon EMR. Also, the company unveiled three database capabilities — Amazon RDS Custom, Amazon DynamoDB Standard-Infrequent Access and Amazon DevOps Guru for RDS.
Coming to regions and Availability Zones, the company has 81 Availability Zones across 25 geographic regions. The company intends to roll out additional 24 Availability Zones and eight AWS regions.
On the heels of the expanding services portfolio, regions and Availability Zones, AWS experienced strong growth in its clientele with the addition of United Airlines, Rivian, American International Group, Qualtrics, Richemont and Gilead Sciences, which selected AWS as the preferred cloud provider.
Aurora selected AWS as its preferred cloud provider for machine learning training and cloud-based simulation workloads. Also, adidas and Under Armour picked AWS as its preferred cloud provider for SAP.
Nasdaq signed a multi-year agreement with AWS in a bid to accelerate the development of advanced cloud-enabled infrastructure for the world's capital markets.
Discovery expanded its relationship with AWS to drive its transformation in the cloud. The Federal National Mortgage Association — Fannie Mae — picked AWS to shift IT workloads from on-premise data centers to AWS.
Pfizer picked AWS to leverage its capabilities in analytics, machine learning, compute, storage, security, and cloud data warehousing for its laboratory, clinical manufacturing, and clinical supply-chain efforts. Also, Roche Group utilizes AWS for its majority of cloud workloads.
Robust Smart Devices Portfolio
Amazon’s strength in the smart devices portfolio continued to benefit its performance in the fourth quarter.
The company’s expanding portfolio of Fire TV remained beneficial. Notably, the number of Fire TV devices sold across the world stands at 150.
Apart from this, advancing skills and features of Alexa helped the company in gaining traction among customers in the reported quarter.
Strengthening Echo smart speaker offerings contributed well. The company added a motion detection feature with the help of which Echo devices recognize movement through ultrasound technology.
Additionally, Amazon rolled out the Amazon Smart Air Quality Monitor in Canada, France, Italy, Spain, the U.K., and the United States.
Quarter in Detail
Product sales (52% of sales) increased 0.5% year over year to $71.4 billion. Service sales (48% of sales) rose 21.1% from the year-ago quarter to $65.9 billion.
Operating expenses were $133.9 billion, up 12.9% from the year-ago quarter. As a percentage of revenues, the figure expanded 300 basis points (bps) on a year-over-year basis to 97.5%.
Cost of sales, fulfillment, technology & content, marketing, and general & administrative expenses increased 4.5%, 21.5%, 27.1%, 46% and 28.3% to $82.8 billion, $22.4 billion, $15.3 billion, $10.8 billion and $2.5 billion, respectively, on a year-over-year basis.
Other operating expenses were $24 million in the reported quarter against $496 million of other operating income in the year-ago quarter.
Overall operating income decreased 49.6% from the year-ago quarter to $3.5 billion. The operating margin contracted 300 bps from the year-ago quarter to 2.5%.
Operating income for AWS was $5.3 billion, up 48.5% year over year.
Meanwhile, the North America and International segments generated operating losses of $206 million and $1.6 billion in the reported quarter against the operating income of $2.9 billion and $363 million in the year-ago quarter, respectively.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash and cash equivalents were $36.2 billion, up from $29.9 billion as of Sep 30, 2021. Marketable securities totaled $59.8 billion at the end of the fourth quarter, up from $49.04 billion at the end of the third quarter.
Long-term debt was $48.7 billion in the reported quarter, down from $50.1 billion in the previous quarter.
The company generated $22.1 billion in cash from operation in the fourth quarter, which increased from $7.3 billion in the prior quarter.
On a trailing 12-month basis, free cash flow was an outflow of $9.1 billion in the reported quarter against an inflow of $2.6 billion in the prior quarter.
Guidance
For first-quarter 2021, Amazon expects net sales between $112 billion and $117 billion. Further, net sales are expected to grow 3-8% year over year. The Zacks Consensus Estimate for net sales is pegged at $121.33 billion.
Management projects an unfavorable foreign exchange impact of 150 bps.
Income from operational activities is likely to be between $3 billion and $6 billion.
Image: Bigstock
Amazon (AMZN) Q4 Earnings Crush Estimates, Sales Rise Y/Y
Amazon.com (AMZN - Free Report) reported fourth-quarter 2021 earnings of $27.75 per share, which surpassed the Zacks Consensus Estimate of $3.89 per share. The bottom line significantly increased 96.9% year over year and from $6.12 per share reported in the previous quarter.
Net sales of $137.4 billion rose 9% year over year and 24% sequentially. Notably, the figure was within the management’s guidance of $130-$140 billion. However, it missed the Zacks Consensus Estimate of $137.9 billion.
North America revenues (60% of sales) rose 9% from the year-ago quarter to $82.4 billion. International revenues (27% of sales) declined 1% year over year to $37.3 billion. Amazon Web Services (“AWS”) revenues (13% of sales) rose 40% year over year to $17.8 billion.
Solid AWS momentum contributed well to top-line growth of the company.
The robust performance delivered by Amazon during the holiday season drove top-line growth. Notably, it witnessed record-breaking sales during Black Friday and Cyber Monday on which apparel, beauty, home and toys were the top-selling categories.
Strengthening relationships with third-party sellers, especially small and medium-sized businesses (SMBs), remained a major positive. During the holiday season, more than 130,000 sellers worldwide exceeded sales of $100,000 on Amazon store. Sellers in the United States sold an average of 11,500 items per minute during Black Friday and Christmas. The company witnessed huge success in the Great Indian Festival sales event, in which around 30,000 sellers generated sales above $100,000.
All these factors led to year-over-year growth of 11% in sales generated by third-party seller services, which stood at $30.3 million in the reported quarter.
Strong momentum across Prime members remained another positive. The company witnessed strong growth in its subscription services in the reported quarter. Sales from the services went up 15% from the prior-year quarter to $8.12 billion.
Expanding physical presence was a tailwind. Sales from physical stores grew 17% year over year to $4.7 billion.
Additionally, strengthening smart device offerings continued to benefit the company’s fourth-quarter performance.
However, the company witnessed softness in the online store sales, which decreased 1% year over year to $66.1 billion. Unfavorable foreign exchange rates were other concerns.
Uncertainties related to the coronavirus pandemic, foreign exchange fluctuations, changing customer preferences, labor shortages in the market and supply-chain disruptions remain overhangs for the company.
Nevertheless, Amazon’s strong global presence, growing Prime momentum, robust data center network and an increasing number of AWS regions, improving Alexa skills, expanding smart devices portfolio, and growing efforts toward gaining strong traction among small and medium businesses are likely to drive its near-term financial performance.
Growing capabilities in grocery, pharmacy, Amazon Care, Kuiper and Zoox remain other positives.
Notably, Amazon has announced a price hike for the monthly and annual subscriptions of Prime.
Shares of the company have risen 10.9% in the pre-market trading, which can be primarily attributed to the robust performance of AWS in the fourth quarter and the Prime price hike.
Amazon.com, Inc. Price, Consensus and EPS Surprise
Amazon.com, Inc. price-consensus-eps-surprise-chart | Amazon.com, Inc. Quote
Prime & Retail Efforts
The company continued to make strong efforts toward bolstering its Prime program and the retail business.
Amazon’s rising investment in the expansion of its quick delivery services such as Free Same-Day Delivery and Faster Same-Day Delivery services across the world continued to drive its momentum among Prime shoppers. Notably, Free Same-Day Delivery is currently available in more than 90 metro areas in the United States and 58 metro areas in Europe. It is also available in Tokyo, Japan. Further, Faster Same-Day Delivery is available in 24 metro areas in the United States at present.
In addition to these, the growing adoption of Amazon’s cashier-less technology remained positive. Starbucks opened a “pickup cafe” with Amazon Go store in New York City, which allows customers to order food or beverages for pickup through the Starbucks app and collect them
from the Amazon Go store.
In London, Sainsbury's, one of the largest supermarket chains in the U.K., opened a SmartShop Pick & Go store, leveraging the Just Walk Out technology of Amazon.
Amazon’s partnership with Affirm to offer buy now, pay later flexibility continued to drive its customer momentum.
Apart from these, expanding original content and the overall content portfolio on Prime Video continued to accelerate Prime engagement.
We note that Prime Video streamed series named The Wheel of Time, Harlem, Fairfax and the final season of The Expanse in the fourth quarter.
Also, original movies, Being the Ricardos and The Tender Bar, premiered on Prime Video in the fourth quarter.
Prime Video streamed 28 local originals internationally. Maradona: Blessed Dream (Argentina), Burning (Australia), Inside Edge Season 3 (India), and The Ferragnez - The Series (Italy) are few among them.
The company’s growing momentum in live sports streaming was another positive. Prime Video had the strongest viewership for live sports in the fourth quarter, with the 2021-2022 Thursday Night Football season, which delivered the highest average minute audience. Also, the Manchester United vs. Arsenal soccer game on Dec 2, 2021, became the most-watched Premier League match ever.
Additionally, the strengthening momentum of Amazon Music contributed well.
Expanding AWS Portfolio: A Key Catalyst
AWS, which witnessed strong top-line growth, continued to gain customer momentum in the fourth quarter, courtesy of its highly reliable services portfolio.
In the fourth quarter, Amazon unveiled a visual development environment — AWS Amplify Studio — which enables web application user interface creation with minimal coding.
The company introduced AWS Private 5G, which enables enterprises to deploy and scale their 5G mobile network seamlessly.
AWS announced a managed service called AWS IoT FleetWise, which helps collect and transfer data from millions of vehicles to the cloud in real-time cost-efficiently.
It announced AWS IoT TwinMaker, which helps in the quick creation of digital twins of devices, equipment and processes.
The company unveiled three Amazon Elastic Compute Cloud (Amazon EC2) instances, namely C7g, Trn1 and Im4gn/Is4gen/I4i.
It announced four storage services and capabilities — Amazon Simple Storage Service Glacier Instant Retrieval, Amazon FSx for OpenZFS, Amazon EBS Snapshots Archive and AWS Backup.
AWS introduced six capabilities for Amazon SageMaker, namely Canvas, Ground Truth Plus, Studio, Training Compiler, Inference Recommender and Serverless Inference.
The company unveiled a managed wide area network (WAN) service, namely AWS Cloud WAN, which aids in the seamless development, management, operation and monitoring of a global network with the help of a central dashboard.
It also announced the general availability of Babelfish for Amazon Aurora PostgreSQL-Compatible Edition, which helps run Microsoft SQL Server applications on Amazon Aurora seamlessly.
The company rolled out AWS Mainframe Modernization, which aids in the quick migration of mainframe and legacy workloads to the cloud.
It introduced serverless options for Amazon Redshift, Amazon Managed Streaming for Apache Kafka, and Amazon EMR. Also, the company unveiled three database capabilities — Amazon RDS Custom, Amazon DynamoDB Standard-Infrequent Access and Amazon DevOps Guru for RDS.
Coming to regions and Availability Zones, the company has 81 Availability Zones across 25 geographic regions. The company intends to roll out additional 24 Availability Zones and eight AWS regions.
On the heels of the expanding services portfolio, regions and Availability Zones, AWS experienced strong growth in its clientele with the addition of United Airlines, Rivian, American International Group, Qualtrics, Richemont and Gilead Sciences, which selected AWS as the preferred cloud provider.
Aurora selected AWS as its preferred cloud provider for machine learning training and cloud-based simulation workloads. Also, adidas and Under Armour picked AWS as its preferred cloud provider for SAP.
Nasdaq signed a multi-year agreement with AWS in a bid to accelerate the development of advanced cloud-enabled infrastructure for the world's capital markets.
Discovery expanded its relationship with AWS to drive its transformation in the cloud. The Federal National Mortgage Association — Fannie Mae — picked AWS to shift IT workloads from on-premise data centers to AWS.
Pfizer picked AWS to leverage its capabilities in analytics, machine learning, compute, storage, security, and cloud data warehousing for its laboratory, clinical manufacturing, and clinical supply-chain efforts. Also, Roche Group utilizes AWS for its majority of cloud workloads.
Robust Smart Devices Portfolio
Amazon’s strength in the smart devices portfolio continued to benefit its performance in the fourth quarter.
The company’s expanding portfolio of Fire TV remained beneficial. Notably, the number of Fire TV devices sold across the world stands at 150.
Apart from this, advancing skills and features of Alexa helped the company in gaining traction among customers in the reported quarter.
Strengthening Echo smart speaker offerings contributed well. The company added a motion detection feature with the help of which Echo devices recognize movement through ultrasound technology.
Additionally, Amazon rolled out the Amazon Smart Air Quality Monitor in Canada, France, Italy, Spain, the U.K., and the United States.
Quarter in Detail
Product sales (52% of sales) increased 0.5% year over year to $71.4 billion. Service sales (48% of sales) rose 21.1% from the year-ago quarter to $65.9 billion.
Operating expenses were $133.9 billion, up 12.9% from the year-ago quarter. As a percentage of revenues, the figure expanded 300 basis points (bps) on a year-over-year basis to 97.5%.
Cost of sales, fulfillment, technology & content, marketing, and general & administrative expenses increased 4.5%, 21.5%, 27.1%, 46% and 28.3% to $82.8 billion, $22.4 billion, $15.3 billion, $10.8 billion and $2.5 billion, respectively, on a year-over-year basis.
Other operating expenses were $24 million in the reported quarter against $496 million of other operating income in the year-ago quarter.
Overall operating income decreased 49.6% from the year-ago quarter to $3.5 billion. The operating margin contracted 300 bps from the year-ago quarter to 2.5%.
Operating income for AWS was $5.3 billion, up 48.5% year over year.
Meanwhile, the North America and International segments generated operating losses of $206 million and $1.6 billion in the reported quarter against the operating income of $2.9 billion and $363 million in the year-ago quarter, respectively.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash and cash equivalents were $36.2 billion, up from $29.9 billion as of Sep 30, 2021. Marketable securities totaled $59.8 billion at the end of the fourth quarter, up from $49.04 billion at the end of the third quarter.
Long-term debt was $48.7 billion in the reported quarter, down from $50.1 billion in the previous quarter.
The company generated $22.1 billion in cash from operation in the fourth quarter, which increased from $7.3 billion in the prior quarter.
On a trailing 12-month basis, free cash flow was an outflow of $9.1 billion in the reported quarter against an inflow of $2.6 billion in the prior quarter.
Guidance
For first-quarter 2021, Amazon expects net sales between $112 billion and $117 billion. Further, net sales are expected to grow 3-8% year over year. The Zacks Consensus Estimate for net sales is pegged at $121.33 billion.
Management projects an unfavorable foreign exchange impact of 150 bps.
Income from operational activities is likely to be between $3 billion and $6 billion.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the retail-wholesale sector are Costco Wholesale (COST - Free Report) , Dollar Tree (DLTR - Free Report) and The Kroger (KR - Free Report) , each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Costco has gained 46.9% over a year. The long-term earnings growth rate for COST is currently projected at 8.78%.
Dollar Tree has gained 24.8% over a year. The long-term earnings growth rate for DLTR is currently projected at 12.18%.
Kroger has gained 36.1% over a year. The long-term earnings growth rate for KR is currently projected at 8.37%.