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Amazon.com (AMZN - Free Report) delivered second-quarter 2024 earnings of $1.26 per share, which grew 93.8% from the year-ago quarter.
AMZN’s net income, totaling $13.5 billion, is inclusive of a pre-tax valuation gain of $0.4 billion in non-operating income associated with its investment in Rivian Automotive.
The adjusted bottom-line figure was $1.23 per share, topping the Zacks Consensus Estimate by 17.1%.
Net sales of $147.98 billion rose 10% year over year. The figure came closer to the higher end of management’s guidance of $138-$143.5 billion but missed the Zacks Consensus Estimate of $148.63 billion.
Amazon witnessed a $1-billion impact of unfavorable fluctuations in foreign exchange rates in the reported quarter. Excluding this impact, net sales would exhibit year-over-year growth of 11%.
Top-line growth was primarily driven by strength in Amazon Web Services (“AWS”) segment. Solid momentum across the North America and International segments was a positive.
Growing advertising business also benefited the company in the reported quarter.
AWS’s growing investments in generative AI are likely to continue aiding it in gaining momentum among cloud customers in the near term.
Amazon’s strong global presence, growing Prime momentum, and increasing efforts toward gaining strong traction among small and medium businesses are likely to drive its financial performance in the days ahead.
However, geo-political tensions, foreign exchange headwinds, recessionary fears, inflation, interest rates and regional labor market constraints are concerning.
AMZN has gained 13% over a year, underperforming the industry’s growth of 15.1%.
Amazon.com, Inc. Price, Consensus and EPS Surprise
Product sales (41.6% of sales) increased 4.3% year over year to $61.6 billion. Service sales (58.4% of sales) rose 14.7% from the year-ago quarter to $86.4 billion.
By segment, North America revenues (61% of sales) rose 9% from the year-ago quarter to $90.03 billion, which missed the Zacks Consensus Estimate of $90.9 billion.
International revenues (21% of sales) increased 7% year over year to $31.7 billion, which missed the consensus mark of $31.9 billion.
AWS revenues (18% of sales) rose 19% year over year to $26.3 billion, which surpassed the consensus mark of $25.9 billion. Solid momentum in Amazon Bedrock, owing to expanding Large Language Model offerings, continued to boost the adoption of AWS.
Strengthening relationships with third-party sellers remained another positive. In the reported quarter, sales generated by third-party seller services rose 12% on a year-over-year basis to $36.2 billion, which marginally lagged the Zacks Consensus Estimate of $36.3 billion.
Sales from robust advertising services increased 20% year over year to $12.8 billion, which lagged the consensus mark of $13 billion.
AMZN experienced 4% year-over-year growth in its physical store sales which were $5.21 billion in the reported quarter. The figure missed the consensus mark of $5.25 billion.
The company’s online store sales were $55.4 billion, up 5% year over year. The figure lagged the Zacks Consensus Estimate of $55.8 billion.
Strength in Prime on the back of ultrafast delivery services, and expanding original content and an international slate of content on Prime Video were positives. Amazon witnessed 10% year-over-year growth in its subscription services sales which were $10.9 billion in the reported quarter. The figure marginally beat the consensus mark of $10.8 billion.
Operating Details
Operating expenses were $133.3 billion, up 5.2% from the year-ago quarter. As a percentage of revenues, the figure contracted 420 basis points (bps) on a year-over-year basis to 90.1%.
The cost of sales, fulfillment, and technology and infrastructure expenses increased 6.4%, 10.6% and 1.7% year over year to $73.8 billion, $23.6 billion and $22.3 billion, respectively.
Sales and marketing, general and administrative, and other operating expenses were $10.5 billion, $3.04 billion and $97 million, down 2.2%, 5% and 33.6% year over year, respectively.
Overall operating income was $14.7 billion, up 91% from the year-ago quarter.
Operating income for AWS was $9.3 billion, up 74% year over year.
The North America segment reported an operating income of $5.1 billion, up 57.7% year over year. The International segment reported an operating income of $273 million against an operating loss of $895 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash and cash equivalents were $71.2 billion, down from $72.9 billion as of Mar 31, 2024.
Marketable securities totaled $17.9 billion as of Jun 30, 2024, up from $12.2 billion as of Mar 31, 2024.
The long-term debt was $54.9 billion at the end of the reported quarter, down from $57.6 billion at the end of the previous quarter.
In the second quarter, AMZN generated $25.3 billion of cash from operations, up from $18.9 billion in the first quarter.
On a trailing 12-month basis, the operating cash flow came in at $108 billion. The free cash flow was $53 billion.
Guidance
For third-quarter 2024, Amazon expects net sales between $154 billion and $158.5 billion. Net sales are expected to grow 8-11% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for net sales is pegged at $158.17 billion.
Management projects an unfavorable foreign exchange impact of 90 bps.
Operating income is anticipated between $11.5 billion and $15 billion.
Image: Bigstock
Amazon (AMZN) Q2 Earnings Beat Estimates, Sales Rise Y/Y
Amazon.com (AMZN - Free Report) delivered second-quarter 2024 earnings of $1.26 per share, which grew 93.8% from the year-ago quarter.
AMZN’s net income, totaling $13.5 billion, is inclusive of a pre-tax valuation gain of $0.4 billion in non-operating income associated with its investment in Rivian Automotive.
The adjusted bottom-line figure was $1.23 per share, topping the Zacks Consensus Estimate by 17.1%.
Net sales of $147.98 billion rose 10% year over year. The figure came closer to the higher end of management’s guidance of $138-$143.5 billion but missed the Zacks Consensus Estimate of $148.63 billion.
Amazon witnessed a $1-billion impact of unfavorable fluctuations in foreign exchange rates in the reported quarter. Excluding this impact, net sales would exhibit year-over-year growth of 11%.
Top-line growth was primarily driven by strength in Amazon Web Services (“AWS”) segment. Solid momentum across the North America and International segments was a positive.
Growing advertising business also benefited the company in the reported quarter.
AWS’s growing investments in generative AI are likely to continue aiding it in gaining momentum among cloud customers in the near term.
Amazon’s strong global presence, growing Prime momentum, and increasing efforts toward gaining strong traction among small and medium businesses are likely to drive its financial performance in the days ahead.
However, geo-political tensions, foreign exchange headwinds, recessionary fears, inflation, interest rates and regional labor market constraints are concerning.
AMZN has gained 13% over a year, underperforming the industry’s growth of 15.1%.
Amazon.com, Inc. Price, Consensus and EPS Surprise
Amazon.com, Inc. price-consensus-eps-surprise-chart | Amazon.com, Inc. Quote
Top-Line Details
Product sales (41.6% of sales) increased 4.3% year over year to $61.6 billion. Service sales (58.4% of sales) rose 14.7% from the year-ago quarter to $86.4 billion.
By segment, North America revenues (61% of sales) rose 9% from the year-ago quarter to $90.03 billion, which missed the Zacks Consensus Estimate of $90.9 billion.
International revenues (21% of sales) increased 7% year over year to $31.7 billion, which missed the consensus mark of $31.9 billion.
AWS revenues (18% of sales) rose 19% year over year to $26.3 billion, which surpassed the consensus mark of $25.9 billion. Solid momentum in Amazon Bedrock, owing to expanding Large Language Model offerings, continued to boost the adoption of AWS.
Strengthening relationships with third-party sellers remained another positive. In the reported quarter, sales generated by third-party seller services rose 12% on a year-over-year basis to $36.2 billion, which marginally lagged the Zacks Consensus Estimate of $36.3 billion.
Sales from robust advertising services increased 20% year over year to $12.8 billion, which lagged the consensus mark of $13 billion.
AMZN experienced 4% year-over-year growth in its physical store sales which were $5.21 billion in the reported quarter. The figure missed the consensus mark of $5.25 billion.
The company’s online store sales were $55.4 billion, up 5% year over year. The figure lagged the Zacks Consensus Estimate of $55.8 billion.
Strength in Prime on the back of ultrafast delivery services, and expanding original content and an international slate of content on Prime Video were positives. Amazon witnessed 10% year-over-year growth in its subscription services sales which were $10.9 billion in the reported quarter. The figure marginally beat the consensus mark of $10.8 billion.
Operating Details
Operating expenses were $133.3 billion, up 5.2% from the year-ago quarter. As a percentage of revenues, the figure contracted 420 basis points (bps) on a year-over-year basis to 90.1%.
The cost of sales, fulfillment, and technology and infrastructure expenses increased 6.4%, 10.6% and 1.7% year over year to $73.8 billion, $23.6 billion and $22.3 billion, respectively.
Sales and marketing, general and administrative, and other operating expenses were $10.5 billion, $3.04 billion and $97 million, down 2.2%, 5% and 33.6% year over year, respectively.
Overall operating income was $14.7 billion, up 91% from the year-ago quarter.
Operating income for AWS was $9.3 billion, up 74% year over year.
The North America segment reported an operating income of $5.1 billion, up 57.7% year over year. The International segment reported an operating income of $273 million against an operating loss of $895 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash and cash equivalents were $71.2 billion, down from $72.9 billion as of Mar 31, 2024.
Marketable securities totaled $17.9 billion as of Jun 30, 2024, up from $12.2 billion as of Mar 31, 2024.
The long-term debt was $54.9 billion at the end of the reported quarter, down from $57.6 billion at the end of the previous quarter.
In the second quarter, AMZN generated $25.3 billion of cash from operations, up from $18.9 billion in the first quarter.
On a trailing 12-month basis, the operating cash flow came in at $108 billion. The free cash flow was $53 billion.
Guidance
For third-quarter 2024, Amazon expects net sales between $154 billion and $158.5 billion. Net sales are expected to grow 8-11% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for net sales is pegged at $158.17 billion.
Management projects an unfavorable foreign exchange impact of 90 bps.
Operating income is anticipated between $11.5 billion and $15 billion.
Zacks Rank & Other Stocks to Consider
Currently, Amazon carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader retail-wholesale sector are The Gap , Booking Holdings (BKNG - Free Report) and Best Buy (BBY - Free Report) . While The Gap sports a Zacks Rank #1 (Strong Buy), Amazon and Best Buy carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Gap has gained 11.2% in the year-to-date period. The long-term earnings growth rate for GPS is estimated at 3.38%.
Shares of Booking Holdings have lost 4.2% in the year-to-date period. The long-term earnings growth rate for BKNG is projected at 18.75%.
Best Buy has gained 11.5% in the year-to-date period. The long-term earnings growth rate for BBY is anticipated at 5.07%.