Amazon Earnings Beat, Primarily Buoyed By Strong Sales And It Cloud Division

Amazon reported its earnings last week but before we jump into overall figures, let’s talk about Amazon’s public cloud service AWS (Amazon Web Services). Revenue jumped 42 percent in the first quarter of 2017 to $3.66b from $2.57b from the same period in 2016. Operating income stood at $890m up 47 percent from last year and this makes AWS the biggest contributor with respect to operating income in the Amazon family.

Amazon official Press Statement on its Q1 earnings

Operating cash flow increased 53% to $17.6 billion for the trailing twelve months, compared with $11.6 billion for the trailing twelve months ended March 31, 2016. Free cash flow increased to $10.2 billion for the trailing twelve months, compared with $6.7 billion for the trailing twelve months ended March 31, 2016. Free cash flow less lease principal repayments increased to $6.2 billion for the trailing twelve months, compared with $3.8 billion for the trailing twelve months ended March 31, 2016. Free cash flow less finance lease principal repayments and assets acquired under capital leases increased to $3.3 billion for the trailing twelve months, compared with $1.9 billion for the trailing twelve months ended March 31, 2016.

Common shares outstanding plus shares underlying stock-based awards totaled 497 million on March 31, 2017, compared with 490 million one year ago.

Net sales increased 23% to $35.7 billion in the first quarter, compared with $29.1 billion in first quarter 2016. Excluding the $492 millionunfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 24% compared with first quarter 2016.

Operating income decreased 6% to $1.0 billion in the first quarter, compared with operating income of $1.1 billion in first quarter 2016.

Net income was $724 million in the first quarter, or $1.48 per diluted share, compared with net income of $513 million, or $1.07 per diluted share, in first quarter 2016.

“Our India team is moving fast and delivering for customers and sellers. The team has increased Prime selection by 75% since launching the program nine months ago, increased fulfillment capacity for sellers by 26% already this year, announced 18 Indian Original TV series, and just last week introduced a Fire TV Stick optimized for Indian customers with integrated voice search in English and Hindi,” said Jeff Bezos, Amazonfounder and CEO. “We’re grateful that customers are responding — Amazon.in is the most visited and the fastest growing marketplace in India. It’s still Day 1 for e-commerce in India, and I assure you that we’ll keep investing in technology and infrastructure while working hard to invent on behalf of our customers and small and medium businesses in India.”

Second Quarter 2017 Guidance

• Net sales are expected to be between $35.25 billion and $37.75 billion, or to grow between 16% and 24% compared with second quarter 2016. This guidance anticipates an unfavorable impact of approximately $720 million or 240 basis points from foreign exchange rates.
• Operating income is expected to be between $425 million and $1.075 billion, compared with $1.3 billion in second quarter 2016.
• This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.