Even the President’s jabs couldn’t stop Amazon from blowing away expectations with its first-quarter earnings.
The company broke the $50 billion revenue mark and clocked in with a 43 percent jump in sales. The results also marked its 12th straight quarter of profitability.
Analysts estimated revenue would come in at $49.96 billion with earnings of $1.27 per share. In actuality, Amazon tallied $51 billion in revenues and earnings per share of $3.27. Wall Street reacted by sending Amazon stock up 6.7 percent in after-hours trading.
According to Moody’s, this quarter furthers the trend of investment-fueled revenue expansion. “On the North American product side, 26 percent year-over-year revenue growth (ex-Whole Foods, which added around $4 billion) was supported by around 100 basis points in operating margin expansion, indicating that investments are gaining traction,” stated Charlie O’Shea, Moody’s lead retail analyst. “Liquidity remains formidable, buttressed by $25 billion in cash and short-term investments, providing ample cushion as the company continues to invest across its many platforms.”
Stephen Sohn, Moody’s tech analyst, pointed to Amazon Web Services’ nearly 50 percent increase in sales, along with approximately 140 basis point improvement in operating margin, as indicators that “enterprises continue to shift increasing IT workloads into the public cloud.”
Founder and chief executive officer Jeff Bezos chalked up AWS’ success to an early beginning. “[It has] the unusual advantage of a seven-year head start before facing like-minded competition,” he said, allowing it to develop into a mature business, as others strive to get their cloud networks off the ground.
While AWS may be a key revenue generator, it’s obviously not the only focal area. Indeed, mapping out the Amazon universe is no easy task — not even for Bezos. In his message to shareholders last week, he spotlighted Prime subscriptions, Amazon Web Services, the marketplace, Alexa technology, Amazon devices, Prime Video, Amazon Music, Whole Foods, its Amazon Go cashier-less experience, Treasure Truck immediate deliveries, as well as global expansion, sustainability and other areas.
But that’s just the beginning. Over the past week, the company added more initiatives, including AWS’ new blockchain templates, as well as product deliveries to shoppers’ car trunks.
If it all seems just a bit wacky, that’s because it is. But that’s typical for Amazon.
The company has always been an outlier that bucked established ways of doing business to pursue experiments. For years, baffled industry watchers scratched their heads as Amazon seemed to have little concern while losing money. Although it was founded in 1994 and went public in 1997, it didn’t post profits until 2001.
Over the past couple of years, it has become clear that the gamble is paying off. The company now swells with 560,000 employees, two million sellers and a burgeoning list of initiatives. Now, it’s emboldened by a string of profitable quarters and massively growing revenues. Its profits are poised to grow even more, with Prime fees going from $99 to $119 per year for new subscribers as of May 11.
Look for it to reach farther and go wilder, and push new ideas at an even more furious pace. These already extend into new and sometimes oddball services — Whole Foods free delivery, car deliveries and even placing packages inside people’s houses — as it develops its line of consumer electronics and the voice technology driving its Fire and Echo products.
But at heart, Amazon is a retailer, and ultimately its efforts go back to that. In his letter, Bezos wrote, “We continue to aspire to be Earth’s most customer-centric company…” This is more fundamental than it seems. Amazon sells things, and it wants to do that better, faster and more efficiently. This is where the company’s tech ambitions come in. Fashion as well, which remains a hot target for the company. Notably, Bezos even called it out to his shareholders.
He wrote, “Amazon has become the destination for tens of millions of customers to shop for fashion.” In glowing terms, he described Prime Wardrobe, Merch by Amazon and deals with Nike, Ugg, Drew Barrymore and Dwyane Wade, as well as its partnership with Calvin Klein on pop-up stores, onsite customizations and Alexa-equipped fitting rooms.
Under Bezos, the company has spun out dozens of private labels, written patents for shape-shifting mannequins, packed its gadgets with styling features, and more. And it’s not done yet. If there’s one thing Amazon has proven over time, it’s that the company’s willing to play the long game. It will keep trying, dabbling with tactics, until it figures out the business. Experts believe it’s getting closer by the day.