It is time for Amazon to release first quarter results. Amazon stock has rallied an impressive 18% since the 2021 bottom reached in early March, ahead of the April 29 event. Will shares find further support, following the company’s first quarter earnings day?
The Apple Maven will cover Amazon’s results and follow the conference call conversations, starting at 4 p.m. EST. The press release should come out at 4:05 p.m. EST, and the earnings call is set to begin at 5:30 p.m. ET.
Here is a brief recap of the key pre-earnings topics of discussion. To skip the preview, scroll straight down to the "Live Coverage Starts Here!" section for real time insights.
Previewing Amazon’s earnings day
- The bar is set high. Wall Street expects Amazon to deliver impressive first quarter numbers: revenue growth of almost 40% and EPS (earnings per share) increase of nearly 100%! This would certainly be a record-breaking first quarter for the Seattle-based giant.
- E-commerce on fire. Due to the size of the segment, in revenue terms, North America e-commerce will be a focal point. I expect nothing but blue skies, due to a combination of a recovering economy (especially in the US) and the lingering effects of the COVID-19 pandemic driving a shift in shopping habits that favor online retailers.
- Cloud is key. Probably more important to investor sentiment will be the Amazon Web Services segment. The market tends to pay remarkably close attention to the growth rates in the cloud business. Expect this to be a potential stock mover, in either direction.
- Stock split? Amazon shares trade at a whopping $3,500 apiece, or close enough to it. Could the company announce a stock split to bring the per-share value down to something more digestible by the average individual investor? Last year, Tesla and Apple split their stocks, and the result were skyrocketing share prices in the short term.
- Countdown to $2 trillion. Amazon stock is valued at around $1.75 trillion today. A 15% spike in share price would be enough to send the market cap beyond $2 trillion, a feat that only Apple has been able to achieve in the US.
Live coverage starts here!
3:00 a.m. PST: Please stand by for Amazon’s earnings release! I will be back with some late morning comments on share price action. Refresh your browser for updates below.
10:00 a.m. PST: Hello, everyone! The markets have been very erratic today, and so have Amazon shares. The stock is now up +0.4%, but it has bounced around to intraday lows of -0.6% and highs of +1.4%
10:05 a.m. PST: There have not been many (or any) company-specific news this Thursday to move the stock. This is expected, due to the quiet periods ahead of earnings days.
10:06 a.m. PST: I will return at 4 p.m. EST, right at the closing bell, for coverage of Amazon's first quarter results. Will the e-commerce and cloud giant beat aggressive expectations? Stay tuned!
12:55 p.m. PST: We are 5 minutes away from the closing bell! Welcome to the Apple Maven's coverage of Amazon's first quarter results!
12:55 p.m. PST: Amazon's report should be released at around 4:05 p.m. EST. Expect the stock to start moving in after-hours trading right around that time.
12:57 p.m. PST: Here is how Amazon stock has been doing today:
12:58 p.m. PST: It's been a hot-and-cold day for the markets, but stocks seem to have found their way north.
1:00 p.m. PST: And this is it! The closing bell has rung! Let's go!
1:01 p.m. PST: Four minutes to go for Amazon's Q1 results. Keep in mind these consensus estimate numbers: revenues of $104.6 billion and EPS of $9.64.
1:03 p.m. PST: Numbers are in already! It's an all-around beat! Stock is zipping higher in after hours: +5%!
1:04 p.m. PST: Ladies and gentlemen, a massive EPS beat! Revenues also exceeded aggressive expectations.
1:05 p.m. PST: Big Tech is killing it in the first quarter. Amazon's revenues of $108.5 billion, EPS of $15.79.
1:08 p.m. PST: Quick peek at outlook: $113 billion at the mid-point of the revenue guidance range beats consensus of $108.5 billion; $6.25 billion in op income, also at the midpoint.
1:10 p.m. PST: A few more numbers: op cash flow up 69% looks good! Last quarter, the company delivered 72% growth, so it's consistent.
1:12 p.m. PST: On the press release, still-CEO Jeff Bezos celebrates two anniversaries: AWS is turning 15 years old, and Prime Video is 10.
1:15 p.m. PST: The company also discloses over 200 million Prime members worldwide. This is an important milestone, as I believe Prime is part of Amazon's customer loyalty "secret sauce".
1:18 p.m. PST: As usual, Amazon lists several accomplishments across its several business units, from shopping to entertainment, devices to cloud services. Their full press release can be found on the company's IR website.
1:20 p.m. PST: Important bit about consensus-beating second period guidance: it assumes that Prime Day happens in the June quarter. The event was delayed last year, due to COVID disruptions. Not sure how Wall Street's estimates are currently taking into account the timing of Prime Day.
1:23 p.m. PST: Recall that I mentioned in the Amazon earnings preview above (first few paragraphs) that AWS would likely be one of the most important factors behind post-earnings investors sentiment. See table below:
1:25 p.m. PST: AWS revenues grew 32% in Q1, which was an acceleration vs. last quarter's 28%. A couple days ago, Microsoft reported a sequential deceleration in Azure revenues. Maybe investors are excited about cloud momentum this evening.
1:29 p.m. PST: Speaking of the table above, check out those segment growth rates... all of them above 30%, all of them at or above last quarter rates. Remember that last quarter was already a jaw-dropper of a holiday period.
1:33 p.m. PST: Digging a bit deeper into the segments, online stores largely maintained last quarter's momentum, growing 41%. Physical stores still seem heavily impacted by the pandemic, down -16%.
1:35 p.m. PST: Love to see those subscription growth rates. Not only were they high in Q1, at 34%, they have been very consistent (29% to 34%) over the past six quarters at least. Subscription service is a reliable source of revenues and cash flow.
1:38 p.m. PST: Worth noting, op margin for both North America and International segments reached a six-quarter peak this time. Not sure if lower-than-expected COVID-19 spending (guided at $2 billion) might have something to do with this, I'll need to look closer.
1:40 p.m. PST: AWS margin of 30.8% was the second best in the past six quarters.
1:43 p.m. PST: Here's the bottom line: Amazon delivered a killer quarter, beating its own expectations and Wall Street's consensus across the board. Strength in AWS was probably the highlight, at a growth rate of 32% that lavishly beat consensus by a good 10 percentage points and solid margins. No wonder, $AMZN is still up nearly 4% in after hours, even after the stock climbed 13% in the past month alone.
1:47 p.m. PST: By the way, I asked Twitter what would happen to Amazon on its earnings day. I would have picked "beat, stock hiccups". But I should have listened to the wisdom of the crowd... (see below)
1:50 p.m. PST: Also, I mentioned in the earnings preview above that a possible stock split could be a catalyst for short-term, "sugar rush" share price rally. A stock split was not announced.
1:51 p.m. PST: Someone on Twitter (my memory fails me) told me that Amazon would likely not do a stock split only one quarter before the CEO transition. If anything, let incoming chief executive Andy Jassy deal with that matter. Touché.
1:54 p.m. PST: The earnings call begins in a bit more than half an hour. I think this is a good time to take a break and let all the information sink in. I will be back soon to bring updates from the conference call. Stay tuned!!
1:54 p.m. PST: Amazon stock up +3.9% after hours, by the way.
2:28 p.m. PST: And we're back!
2:30 p.m. PST: Here's the link, once again. Amazon's conference calls tend to last less than an hour, and is usually more focused on Q&A.
2:31 p.m. PST: Call has started! Disclaimers first... CFO Brian Olsavsky will be the main host. Amazon stock begins the call up +3.6%.
2:34 p.m. PST: AWS is highlight #1 in the call. Makes sense.
2:35 p.m. PST: Commentary on cloud migration is upbeat, as expected. Several key contracts are highlighted.
2:35 p.m. PST: In the consumer business, strong demand observed. This is very much in line with everything that I have seen this earnings season.
2:36 p.m. PST: Third-party business remains very strong. This is basically where the strongest growth rates are, in North America e-commerce.
2:37 p.m. PST: Entertainment and media business still on fire. This is probably a combination of lingering pandemic (stay-at-home) forces plus some reopening tailwinds helping sports events.
2:38 p.m. PST: Prime Day confirmed for Q2. This will create a timing benefit for second quarter 2021.
2:40 p.m. PST: "Amazon incurred a little less than $2 billion in COVID-19 operating costs", which is just below guidance. This probably helped with the EPS beat, but it does not seem to have been one of the main factors at play.
2:40 p.m. PST: Q&A starts.
2:41 p.m. PST: Question from Barclay's on last-mile delivery: how much farther to go for impact to be felt in financial results and market share? CFO highlights 80% growth in capex, underscoring investment in fulfillment center. He also thinks that fulfilment cost is already competitive as is. Brian sees continued investment through 2021.
2:45 p.m. PST: Question from Jefferies on AWS and cloud backlog. Growth is $52.9 billion, consistent with past few quarters average of 55%.
2:48 p.m. PST: Question on international growth: any concerns driven by COVID-19, especially in Europe? Growth varies by country, but overall pace is good. Post-COVID growth triple that of pre-COVID levels. Value to customers being delivered. Healthy engagement, growing engagement. Team could not have forecasted 50%-plus growth in Q1.
2:50 p.m. PST: Quick side note, stock remains steady in after-hours trading at +3.2%.
2:51 p.m. PST: Question from KeyBanc on grocery delivery and Fresh store. Grocery has been a "great revelation" during the pandemic. Amazon increased capacity, as Amazon Fresh became a Prime benefit, and company continued to leverage Whole Foods distribution. Excited about Fresh stores, still in the early inning.
2:53 p.m. PST: Question from Cowen on e-commerce demand for Q2, plus a question on advertising acceleration. Increased traffic is a driver of ad revenues, plus deep-learning and other factors. On strong Q2 guidance, Prime Day is a consideration.
2:55 p.m. PST: Question from JPMorgan on Prime Day timing and contribution to Q2 numbers. Amazon is not quantifying the size of it, externally. The timing has to do with some events this year, including the Olympic Games and summer traveling in July.
2:57 p.m. PST: Question from Bank of America on AWS acceleration. No particular customer group to credit. Consistent growth rate over the past few years cited, strength coming from all kinds of verticals. Question on Prime Video as a driver of retail business. Video is a component of the Prime strategy. Brazil cited as a strategy in which Video came before Prime (delivery), and that helps with brand recognition. Video spending expected to continue to grow: live sports, content, etc.
3:01 p.m. PST: High-level question from Morgan Stanley on room for improvement. Speed of innovation cited as part of Amazon's DNA. One-day shipping percentages back to pre-pandemic levels is a current goal. And final question on Echo and other Alexa devices. Goal is to make life easier, and to make Alexa smarter. Expectations are high in smart home, and Amazon is going after it.
3:06 p.m. PST: And that's a wrap!
3:08 p.m. PST: The tone of the call was upbeat, and it couldn't have been different. First period of 2021 was a killer quarter for Amazon, and all seems to be going well: from e-commerce domestically and internationally, to cloud, to media and entertainment. Solid results!
3:10 p.m. PST: As Amazon stock eases into a +3.0% gain after hours, I thank you for your company this evening! Hope to see you all back on the Apple Maven's website soon!