Amazon posted its first-quarter earnings today, and boy did they not disappoint: it beat what analysts were expecting on nearly all fronts, and the stock is up more than 12% after its huge beat.
What’s going on here with the stock? Basically, Amazon shares tend to swing wildly whenever it reports earnings. Last quarter shares tanked 13% after missing fourth-quarter expectations. The year in general has been a rocky one, though it’s been one of the better-performing stocks of the year (it’s up 42%). So it’s not surprising to see such a big swing off today’s earnings after it posted such a successful quarter.
The big one here, in particular, is Amazon Web Services. AWS has become a go-to for most businesses, so it’s not surprising that it’s seeing that segment continue to grow steadily. The company is posting huge year-over-year growth here, meaning that demand is still increasing, despite increasing competition from companies like Google. More and more, it looks like AWS is going to be a huge second line of business for the company, especially if it continues to grow at this rate.
Here’s the scorecard:
- The company reported earnings of $1.07 per share, ahead of 58 cents per share that were expected. The company posted a net loss of 12 cents per share in Q1 2015.
- Revenue was $29.13 billion, ahead of what $27.98 billion that analysts were expecting, and up 22% from the same quarter last year.
- Amazon web services revenue was up to $2.57 billion — ahead of the $2.53 billion that analysts were expecting. That’s up from $1.57 billion in the same quarter a year ago.
- The company sees Q2 revenue of $28 billion to $30.5 billion.
- Unearned revenue came in at $3.77 billion, up from $3.12 billion in the previous quarter.
- Technology and content revenue was $3.5 billion, up from $2.8 billion in Q1 2015.
So the company is over-performing compared to what everyone expected in nearly every category. Amazon is expanding into tons of new markets, like video streaming and expanding its web services business, and of course it has its $99 per year Prime subscription. The company is also increasing its portfolio of devices with the Fire TV and the Amazon Echo.
As usual, Amazon didn’t break out any new numbers for its hardware devices — despite launching a new Kindle (the Kindle Oasis) and two new Amazon Alexa-powered devices.
One big one investors are looking at is directional information about the company’s Amazon Prime memberships. In theory, making it easier/cheaper to deliver things should convince customers to buy more, outweighing the increased shipping costs that the company would sustain. This, in theory, falls under unearned revenue, which appears to be ever-increasing.
We’re updating this post with more information as it comes in