The U.S. online and offline retailer is expected to report earnings of $1.41 per share, down from $1.78 per share last year, according to analysts surveyed by FactSet. Revenue is expected to jump to $37.2 billion, up from $30.4 billion in the year ago period. In the last earning's call, Amazon said it expects revenue to come in between $35.25 billion and $37.75 billion for the second quarter.
Investors can expect management to get a deluge of questions about the Whole Foods (WFM) deal during the earnings call. The $13.7 billion deal that was announced in mid-June after six months of talks between the two companies was a "historical moment," Whole Foods CEO John Mackey said during a town hall meeting. "Together, these two companies are going to do tremendous dreams together," Mackey said. "We're going to make a big difference in the food industry."
Analysts and investors have reacted mostly positively to the deal, believing it's a win-win situation with Amazon getting a well-known quality grocer that it can help by giving it a facelift in technology and distribution and logistics.
Amazon's investment in Whole Foods is in line with the company's strategy to be focused on long-term results, rather than quarterly results. Amazon's CEO of Worldwide Consumer Jeff Wilke noted in the town hall meeting that choosing long-term cash flow over short-term quarterly profit frustrated investors when it first went public in 1997, but now they are mostly used to the philosophy.
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"We've been true to that mantra for our entire life as a public company. And this is the way we will approach the investments that we make together in Whole Foods," Wilke said. "We will think about the long run. We'll think about customers."
UBS analyst Eric Sheridan released a note last week saying that investors will probably focus on revenue-growing opportunities for Amazon rather than the rise and fall of profit from quarter to quarter. "As Amazon continues to invest in its multiple growth opportunities, we believe the company can deliver a high teens revenue compound annual growth rate (CAGR) over the medium term along with moderate margin expansion," he wrote.
As always, analysts will also be looking for Amazon Web Services' (AWS) revenue, which made up 10.3% of the company's overall revenue in the first quarter. The company's cloud business competes with Alphabet's (GOOGL) - Get Alphabet Inc. Class A Report cloud business from its Google unit and Microsoft's (MSFT) - Get Microsoft Corporation Report Azure business. AWS revenue grew by 42.6% quarter-over-quarter for the first quarter of 2017, but its growth has been decelerating. In the 2016 fourth quarter, it saw 47% growth quarter-over-quarter, which was down from the 55% growth in the third quarter and the 58% growth in the second quarter.
Lastly, Amazon recently wrapped up its third annual Prime Day sales event where Prime members get access to special deals on its platform. Amazon said Prime Day 2017 on July 11 was more successful than either of the two previous Prime Days, with sales rising 60% this year from last year. In addition, the company said it gained more Prime members on this year's Prime Day than on any other day in its history. The best-selling item globally on the sales day was the Echo Dot, which is a smaller version of the Amazon Echo smart speaker.
While Amazon has never released Prime member figures, UBS recently said it estimates the company has 63 million Prime members in North America and 34 million Prime members internationally.
Amazon shares rose 1.1% to $1,064.08 on Thursday morning.
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