Amazon.com Inc. (AMZN) is the last of the FANG stocks to report Q1 results, and it will be looking to deliver a performance similar to Netflix (NFLX) and Facebook (FB) , which both rallied after reporting strong top-line figures, rather than Alphabet (GOOGL) , which also reported strong sales momentum but whose cost and spending growth raised concerns.
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On average, analysts polled by FactSet expect Jeff Bezos' company to report Q1 revenue of $49.92 billion (up 40% annually) and GAAP EPS of $1.24. Second quarter revenue and operating income consensus estimates are $52.22 billion (up 38%) and $1.13 billion, respectively. Revenue growth for both quarters will get a moderate boost from the Whole Foods acquisition, which closed last August.
Here are six key numbers to pay attention to when Amazon reports on Thursday after the close:
1. North American segment revenue - Thanks to share gains, Whole Foods and the U.S. e-commerce market's growth, the consensus is for Amazon's North American segment revenue to rise 43% annually to $30.05 billion.
2. International segment revenue - The consensus is for International segment revenue to rise 32% to $14.61 billion. Strong European and Indian momentum have been driving much of this segment's growth. A weak dollar has also been acting as a tailwind in recent quarters.
3. AWS - Following Q4's 45% growth, cloud revenue is expected to rise 44% in Q1 to $5.26 billion. Big enterprise migrations and the steady rollout of new features have helped AWS defy the law of large numbers.
4. Subscription revenue - Amazon's subscription services revenue -- dominated by Prime membership fees but also covering the Music Unlimited service and other content subscriptions -- grew 49% annually in Q4. For Q1, the consensus is for subscription revenue to rise 45% to $2.81 billion. Amazon is about a week removed from disclosing in its annual shareholder letter that it now has over 100 million global Prime members.
5. "Other" revenue - This segment, which is dominated by Amazon's burgeoning ad business, saw revenue rise 62% in Q4 (a seasonally big quarter for ads) to $1.74 billion. For Q1, the consensus is for Other revenue to rise 58% to $1.35 billion. Merkle, an online ad firm catering heavily to retailers, reported that its clients grew their spending on Amazon's Sponsored Product Ads and Headline Search Ads by 96% and 90%, respectively, in Q1. Large ad price increases drove much of the growth.
6. Gross margins (GM) - These have been steadily rising due to a mix shift towards higher-margin revenue streams such as AWS, Prime subscription fees and third-party seller services. But rising depreciation expenses (the result of heavy capital spending) are a headwind. In Q4, a seasonally weak quarter for margins, GM rose by 2.5 percentage points to 36.3%. For Q1, the consensus is for GM to rise by only 1 percentage point to 38.2%.
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