Amazon Investors Looking for Profit Surge to Continue

amazon-amzn-logoThere are plenty of anecdotes for investors to take from today’s upcoming Amazon.com Inc. (NASDAQ:AMZN) earnings release. The company has begun to deliver a more consistent profit-focused report, which is quite different from years past where results varied quite dramatically.

Let’s hone in on what investors should expect when the report is released after the bell today.

Amazon recently reported that customer orders surpassed Prime Day 2015 by more than 60% worldwide and more than 50% in the US. It was also the biggest day ever for Amazon devices globally, and a record Prime Day for each Amazon device category including Fire TV, Fire tablets, Kindle e-readers and Alexa-enabled devices. Internet retail sales are what dominate the headline numbers for the e-commerce giant and the golden goose is of course “Amazon Prime” subscriptions which increased 51% y/y 2015, up 47% in the US and a higher rate than that internationally.

But there is another part of Amazon that is growing by leaps and bounds, and that is Amazon Web Services (AWS). This unit grew 64% last quarter, above the 60% estimate. While the AWS growth rate is down from 81% in Q2-2015 and 78% in Q3-2015, last quarter the AWS division generated $2.6 billion in revenue, and is on course to grow to over $10B in revenues this year. Wall Street analysts are certainly paying attention here, and if the company continues to execute at this rate, the avenues to expand services further in the cloud may start to take shape.

Other areas we expect analysts to dig into will be:

  • Brexit – Was there any affect and are those effects still being felt with international sales?
  • Logistics – Is the company going to give us further color on recent moves it made that appear the company is looking to move away from its reliance on UPS and FDX?
  • Amazon Video/Music Services – Are these units competing well against the Netflix, Pandora, and Spotify’s of the world?

As you can see there is plenty to cover when Jeff Bezos and his team release their earnings later today, so stay tuned for more coverage.

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AMZN shares rose $7.27 (+0.99%) to $743.93 in Thursday afternoon trading.

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