Amazon.com Announces Second Quarter Sales Up 20%

https://ir.aboutamazon.com/news-releases/news-release-details/amazoncom-announces-second-quarter-sales-20-634-billion

by cs702 • 7 years ago

125 140 7 years ago

ir.aboutamazon.com

rednerrus• 7 years ago

What a life, sales are up 20% and there are frowns all around...

Obviously not literally what happened, but selling a dollar for 90 cents would help boost the sales figures but hurt the bottom line. Sales alone doesn't tell the whole story.

vernie• 7 years ago

LOL so just forget any changes to inventory commingling and counterfeit merchandise.

kuzko_topia• 7 years ago

Well, the blind eye they seem to turn towards this seem to be rather unimpactful for their bottom line I guess...

mruts3• 7 years ago

Why would you think that your comment is relevant to their sales going up 20%? Maybe they would have gone up more if they didn't have a counterfeiting problem, or maybe they would have gone up less, I dunno.

But fundamentally sales going up has nothing to do with counterfeit goods.

gringoDan• 7 years ago

$14B in goodwill! Crazy.

kgwgk7• 7 years ago

Mostly ($9bn) from the $13bn acquisition of WholeFoods.

mruts3• 7 years ago

That doesn't sound super unreasonable to me. Imagine if Amazon suddenly was a different company with a different name, holding everything else the same. How would this affect cashflows and sales? The difference in sales between this hypothetical company and Amazon is essentially what goodwill is. $14B sounds okay when you think about it like this.

kgwgk7• 7 years ago

No, that’s not what $14bn of goodwill in Amazon’s balance sheet are.

mediaman• 7 years ago

Goodwill is the accounting balance recorded when a company buys another company for more than the value of its assets.

If you have $1bn in assets, and you sell to my company for $2bn, $1bn is recorded as the assets bought and the other $1bn has to be recorded somewhere - and that somewhere is 'goodwill.'

Later, if the acquisition turns out to have been a bad idea, and what I bought from you was worth only $1.2bn, I will record an $800mm 'goodwill impairment' that would be a loss on my income statement and 80% of that goodwill would no longer be recorded as an asset.

carlsborg• 7 years ago

Two interesting points:

1) Close to 70% of Amazon operating income once again can be attributed to AWS.

Consolidated operating income: $3,084 m AWS operating income: $2,121 m

2) AWS revenue was $8.3B for the quarter, 37% more than the same quarter last year.

ajross• 7 years ago

What's interesting isn't the fact that they "make" more from AWS, it's that AWS gets premium margins where their store is running right at cost (and has been, basically forever -- it's their thing, sorta).

The interesting number you left out was the non-AWS revenue, which in 2018 (too lazy to correlate with today's announcement) was $230B, literally 30x higher. AWS is a tiny drop in the bucket, no matter what the profit details say.

Which then prompts the question of why AWS gets that kind of margin, when it would seem like a pretty commoditized field at this point. Linux VMs are an open and very portable deployment platform. You can get them from any number of top tier providers and a huge horde of little ones. You'd expect to see a ton of competition driving prices down, but we don't. I genuinely don't know why.

spenczar5• 7 years ago

I don’t think it’s commoditized. AWS has moved past being just EC2. Virtualization is a small piece or the picture, and building and operating DynamoDB or S3 or SQS are all very tough tasks.

meowface• 7 years ago

AWS is basically "run your entire company's engineering as a service" now, and they've done a good job at it. It's not at all easy to compete with such an integrated and battle-tested platform (other than on cost; AWS can be pretty expensive).

justicezyx2• 7 years ago

Simple.

Server multiplexing.

Let's say I increase fleet utilization for 1%. My projected margin increase 1%, not retrospectively though. Plus the projected server hardware price drop. The margin increases naturally. If there were no competitor from Google and MSFT. Amzn would need to be extremely aggressive to not making a log of money.

That's why Google was very confident in winning the Cloud war back in early 2012-2014, and prior to that time frame. Google can operate fleet utilization way higher than industry standard, and clearly is ahead of Amzn then.

But it turns out a business is not that simple as writing code. And obviously, Amzn catches up in fleet efficiency. AFAIK, now Google and Amzn are almost head on head in that department, while Azure is the poor kid lagging behind. But that's not a problem for MSFT. Their strength is in enterprise and conventional developer community building.

zmmmmm• 7 years ago

It's not commodotized at all. They have successfully achieved the jump to be the "nobody got fired for choosing company X" of cloud computing. Everybody trusts them. I've been directly involved in planning out cloud migration for an organization and put forward other options that were substantially cheaper but it didn't matter: they wanted AWS.

laser• 7 years ago

You’re comparing quarterly revenue from AWS to annual Amazon? The proper ratio is more like 7-8x, not 30x.

hef19898• 7 years ago

That's the case since at least 2016. Back then, when Amazon shares were around 1k USD I had the theory that at least 800 USD came from AWS and the rest came from Amazon's retail business. Made sense back than because before AWS took of shares stood around 200 USD if I remember correctly.

Not sure what that says about Amazon in 2019, so.

Willson50• 7 years ago

Stock is down 3% after hours.

grecy• 7 years ago

But they still need tax breaks if you want them to build in your city!

fooey• 7 years ago

Of course they don't need it, but if states are willing to bribe them billions of dollars, they're happy to run up a bidding war.

canada_dry2• 7 years ago

To put this in some global perspective... Alibaba's one day sales event "Singles Day" last November grossed almost half that amount (i.e. $30B).

Note: Alibaba's operating margins are approx. 30%.

robryan• 7 years ago

I assume a lot of that Alibaba volume is them collecting smaller commission amounts on a larger number of transactions? Would be interesting to know what the gross profit margin is on their revenue figure for the day.

adventured2• 7 years ago

Alibaba is an advertising platform. They're not a retailer like Amazon. The one day sales event is gross merchandise volume, not Alibaba's actual revenue. The parent comment is comparing apples and oranges.

eBay for example did $94b in gross merchandise volume in 2018, their revenue was $10.7b.

justicezyx2• 7 years ago

Their model is different though.

Alibaba has almost no self held sales. While Amzn only include profit from 3rd party as revenue, not sales from 3rd party (AFAIK).

endorphone• 7 years ago

Yet Alibaba's revenue for all of 2018 was $55B USD, compared to $232B USD for Amazon.

I see that one day sale thing appear in many mentions of Amazon and it might be a little...misleading.

scarface743• 7 years ago

Revenue is nothing but bragging rights. Profit is what matters.

mcintyre1994• 7 years ago

Am I missing something or are Alibaba seriously making more than half their annual sales in one single day?

canada_dry2• 7 years ago

Yet Alibaba's operating margins are 15X (31% vs 2%) that of Amazon.

DataWorker• 7 years ago

If you believe their numbers. Many do not.

steve19• 7 years ago

The sales "day", at least for the West, is a week (maybe two?) when everything is on sale but the transactions are held as pending until the sale day.

It is very annoying because the discounts are usually 1-2% (again as a westerner, may well be different for Asia) and it means you might have to wait a week or two for the product to ship.

I have asked stores if they can bill me full price and ship immediately and they say no.

So its really a marketing con to consolidate one or two weeks worth of sales into one day and then proclaim they had such a huge salsa day.

Imagine if Amazon billed two weeks of sales right on Black Friday. The numbers would be insane.

sharkweek• 7 years ago

Proof I have no idea how the stock market works:

“Wow, that’s insane, their stock must have popped back over 2k because of this news!”

checks ticker

“Down 2.5% after hours...?”

mythz9• 7 years ago

As always, it's due to the results being below Wall St estimates that are already priced into the stock which is still trading at an insanely expensive 100 P/E ratio.

brlewis2• 7 years ago

Price/Sales is 4.01, lower than GOOG, FB or MSFT. They are going for growth, not profit. No valuation metric is perfect, but P/E is particularly useless for this company.

DSingularity• 7 years ago

That ratio is unreliable because of how they invest so much in future growth. Those capital and R&D expenses will not be around forever.

freehunter• 7 years ago

This is an important point. The stock market doesn't try to reward companies with higher share prices, it tries to find the correct price and stabilize there.

If your company is expected to do well, that performance is already built into your stock price. Doing exactly as well as expected, even if you've doubled your profits, won't cause your share prices to change at all. Because everyone already expected you to do that, so they were willing to pay more money to own your stock even before the official news.

The only thing that changes the stock market drastically is a surprise.

barrkel• 7 years ago

Buy on the rumor, sell on the news

mywittyname• 7 years ago

AWS growth is priced in. So if the stock priced dropped, then it's likely that most analysts were expecting ~50% YoY revenue increases.

mevile• 7 years ago

Revenue growth slowed due to the cost of one day shipping. It's not about revenue being up, but how much revenue is growing. If revenues go up some large amount, but it's up by less percentage wise than it was up last year that means growth is slowing.

dwaltrip• 7 years ago

Costs aren't factored into revenue.

twiceaday• 7 years ago

The reason the stock market is hard to predict is because it itself is a prediction.

JumpCrisscross• 7 years ago

"Amazon.com Inc.'s record quarterly profit streak has ended, as the online retailer faced higher shipping costs, slowing growth from its cloud-computing business and a steeper loss in its overseas retail business.

The company’s second-quarter profit rose 3.6% from a year ago to $2.63 billion after more than doubling last quarter. It missed analysts’ consensus estimate. Amazon had posted its best-ever profit the previous four quarters."

https://www.wsj.com/articles/amazons-streak-of-record-profit...

m3kw92• 7 years ago

One of the main metric other than rev is shrinking, could be profit margins, or 20% isn’t as large as most analysts predicted

jczhang• 7 years ago

In addition to others points on this, public companies release a guidance, which in concert with analysts' own predictions of growth, is priced in.

mytailorisrich• 7 years ago

These days, every piece of information is already included in the quotations.

Here it means that the large increase is not new information, probably that it does not match predictions/expectations is.

OJFord• 7 years ago

https://www.hl.co.uk/shares/share-research/201907/amazon-pro...

For a company with sales of $233bn last year, Amazon makes surprisingly little profit. That's because the bulk of sales come from the retail business, which generates a comparatively modest profit margin. In fact outside the US, Amazon's retail business loses money.

dfps• 7 years ago

Does anyone feel lile commenting on why stock price fell after this?

vitaflo• 7 years ago

Because earnings came in below forecast.

mruts3• 7 years ago

Why would you expect it to go up? The market was already pricing in the expected sales and clearly the number in the spreadsheets before the second quarter report was higher than the real actualized value that was released.

adventured2• 7 years ago

Effectively zero net income or operating income growth ($2.6b vs $2.5b; and $3.1b vs $3.0b), despite 20% sales growth. The market generally dislikes it when margins contract.

Plus, AWS growth dropped to 37% from 49%, year over year. I consider that a great number given their size is approaching that of Oracle. However, every headline likes to hang on the persistent decline in AWS growth. It's a very large part of what's propping up the enormous AMZN valuation. As goes AWS, so goes the AMZN stock.

newsreview1• 7 years ago

How would it be, to be able to self declare something like "prime day" and make more than black Friday sales?

vikramkr• 7 years ago

They actually missed wall street expectations on profit, this isn't a victorious quarter for then.

Amazon.com Announces Second Quarter Sales Up 20%

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