Amazon (AMZN) Q1 Revenue Beats Estimates, YoY Sales Increase – April 30, 2021
Amazon.com (AMZN – Free Report) reported first quarter 2021 earnings of $ 15.79 per share, beating Zacks’ consensus estimate by 61.9%. The net result also improved by 215.2% compared to the quarter of last year and by 12.1% compared to the previous quarter.
Net sales of $ 108.52 billion significantly exceeded Zacks’ consensus estimate of $ 105.23 billion and exceeded management’s forecast by $ 100 to $ 106 billion. Additionally, the figure increased 44% year over year, but declined 13.6% sequentially.
Revenue in North America (59% of sales) increased 40% from the last quarter to $ 64.4 billion. International revenues (28% of sales) climbed 60% year over year to reach $ 30.6 billion. Amazon Web Services (“AWS”) revenue (12% of sales) increased 32% year-over-year to $ 13.5 billion.
The strong momentum of Prime members remained favorable. Currently, the Prime member base is above the 200 million mark. The company’s subscription services performed strongly in the current quarter. Sales of these services increased 36% from the previous year quarter.
In addition, the continued surge in online shopping triggered by the coronavirus pandemic contributed well, and we note that the sales of the company’s online store increased by 44% compared to the quarter of the previous year.
In addition, strengthening relationships with third party vendors remained a major asset. In the first quarter, sales generated by the services of third-party vendors increased 64% year over year.
Additionally, strong momentum from AWS and strengthening of smart device offerings continued to benefit the company’s performance in the first quarter.
In addition, favorable exchange rates fueled sales growth well.
As for price performance, Amazon returned 54.6% year on year, outperforming the industry rally by 18.3%.
The company’s strong global presence, growing Prime momentum, robust data center network and growing number of AWS regions, improving Alexa skills, expanding smart device portfolio, and growing efforts to gain strong traction among small and medium term financial performance.
Retail and Prime Momentum
Amazon’s aggressive retail strategies continued to support its first quarter results. Expansion of the distribution network and lightning-fast delivery services remained favorable winds.
The strengthening of momentum across Amazon’s last mile network of delivery driver partners remained remarkable. The company has made its same-day delivery service free for orders over $ 35 to select cities in the United States.
Additionally, Prime Wardrobe’s growing momentum through custom functionality has remained remarkable.
In addition, the growing number of Amazon Fresh grocery stores in the United States has helped.
Regarding the international footprint, the expansion of Discover Rooms in countries, namely Canada, France, Germany, India, Italy, Japan, Spain, UK and the United States, was a positive.
In addition, the company opened three Amazon Fresh locations in London, based on Just Walk Out technology.
Apart from that, the growing momentum of Prime Video and Amazon Studios contributed well to the first quarter results.
The reported quarter marked the first quarter in which Amazon Studios won the Hollywood Foreign Press Association’s Golden Globe Award. On top of that, he won 12 Oscar nominations.
Additionally, the expansion of original content and the overall content portfolio on Prime Video continued to accelerate Prime engagement.
We note that Prime Video created Coming 2 America, which was at the top of the Most Streamed Movies in its opening week.
Additionally, new Amazon Originals like Invincible, The Stand in Canada, Guerra de Likes in Mexico, The Great Escapists in the UK, La Templanza in Spain and We Children of Bahnhof Zoo in Germany have helped the company expand its reach. from regional banners.
Along with this, the expansion of live sports content on Prime Video has continued to expand its viewer base.
Expanding the AWS Portfolio: A Key Enabler
AWS, which has seen solid growth in the top line, continued to gain momentum with its customers in the first quarter, thanks to its highly reliable portfolio of services.
In the first quarter, AWS announced general availability of Amazon Lookout for Metrics, which detects anomalies in business metrics using machine learning (ML) technology.
In addition, the company made Amazon Lookout for Vision generally available, which processes multiple images in an hour to detect defects and anomalies in manufactured products.
Additionally, AWS unveiled One Zone storage classes for Amazon Elastic File System or Amazon EFS, which provide lifecycle management and integration with IT services.
Additionally, the company has made X2gd instances available for Amazon Elastic Compute Cloud or Amazon EC2.
Regarding regions and Availability Zones, the company launched a second full region in Japan – the AWS Asia Pacific (Osaka) Region – in the first quarter. Notably, AWS has 80 Availability Zones spread across 25 geographic regions.
In the wake of the expansion of the service portfolio, regions and availability zones, AWS saw strong customer growth with the addition of PGA TOUR, commonly referred to as TOUR, which chose AWS as its official cloud provider. .
In addition, the National Hockey League has partnered with AWS to make the latter its official provider of cloud, AI and ML infrastructure.
Robust portfolio of smart devices
Amazon’s strong Echo smart speaker portfolio continued to be beneficial. Additionally, strengthening Alexa’s functionality has helped the company deliver a better user experience.
Apart from that, its beefed up offering of Wi-Fi devices and its robust portfolio of smart home security cameras have done well.
Neighborhood in detail
Product sales (53% of sales) increased 37.4% year over year to $ 57.5 billion. Sales of services (47% of sales) increased 51.8% from the last quarter to $ 51.03 billion.
Operating expenses were $ 99.6 billion, up 39.4% from the quarter last year. As a percentage of revenue, the figure contracted 290 basis points year over year to 91.8%.
The cost of sales, execution, technology and content, marketing and general and administrative expenses increased by 41%, 43.4%, 33.9%, 28.6% and 36.8% at $ 62.4 billion, $ 16.5 billion, $ 12.5 billion, $ 6.2 billion and $ 1.9 billion, respectively, year after year.
Other operating expenses were $ 38 million in the quarter, down from $ 70 million in the quarter last year.
Overall operating profit increased 122.2% from the last year quarter to $ 8.9 billion. In addition, the operating margin increased 290 basis points from the last year quarter to 8.2%.
AWS operating profit was $ 4.2 billion, up 35% year-over-year. In addition, the same for North America improved 163% from the prior year quarter to $ 3.4 billion.
In addition, the international sector reported operating profit of $ 1.3 billion compared to a loss of $ 398 million in the quarter last year.
Balance sheet and cash flow
As at March 31, 2021, cash and cash equivalents were $ 33.8 billion, compared to $ 42.1 billion as at December 31, 2020. In addition, marketable securities totaled $ 39.4 billion at the end of the first quarter, up from $ 42.3 billion at the end of the fourth. trimester.
Long-term debt was $ 31.9 billion in the current quarter, compared to $ 31.8 billion in the prior quarter.
In addition, the company generated $ 4.2 billion in operating cash in the first quarter, down significantly from $ 30.4 billion in the prior quarter.
Over the past 12 months, free cash flow was $ 26.4 billion in the quarter, down from $ 31.02 million in the prior quarter.
For the second quarter of 2021, Amazon forecasts net sales of between $ 110 billion and $ 116 billion. The figure is expected to improve by 24-30% year over year. Zacks’ consensus estimate for net sales is set at $ 108.03 billion.
Management expects a favorable currency effect of 200 bps.
Income from operating activities is likely to range from operating income of $ 4.5 billion to $ 8 billion.
The guidelines include $ 1.5 billion in costs related to COVID-19.
Zacks ranking and actions to consider
Currently, Amazon carries a Zacks # 3 (Hold) rank.
AutoNation, Inc. (A – Free report), Revolve Group, Inc. (RVLV – Free report) and Americas CarMart, Inc. (ROST – Free Report) are top-ranked stocks in the larger retail and wholesale industry. While AutoNation sports a Zacks # 1 (strong buy) rank, Revolve and Americas CarMart currently have a Zacks # 2 (buy) rank. You can see The full list of today’s Zacks # 1 Rankstocks here.
Long-term earnings growth rates for AutoNation, Revolve and Americas CarMart are set at 12.25%, 14.62% and 13.55%, respectively.
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