Saturday , April 17 2021

Amazon hurts despite a revenue beat: 7 Key Takeaways



Amazon.com plans to raise your spending pace with less losses are weighed in your stock after your last loss of revenue.

After the bell on Thursday, the company of Jeff Bezos reported Q4 revenues of $ 72.38 million (an annual 20%) and a GAAP EPS of $ 6.04 (61% more), showing estimates of " Consensus analysts of $ 71.89 billion and $ 5.65. However, it also targeted revenues from $ 56 billion to $ 60 billion (10 percent to 18 percent) and operating revenues from $ 2.3 billion to $ 3.3 billion (in Comparison with 1.9 billion dollars a year ago) in the current quarter. This is compared to consensus estimates of $ 60.83 billion and $ 3.09 billion.

Amazon shares initially did not move much after the arrival of the report. However, the shares that were sold after the CFO, Brian Olsavsky, pointed out that Amazonia's earnings call for its growth in spending to be accelerating in 2019. Negotiation ended after from 4.9% to $ 1,635.00, after having gone up 2.9% in ordinary trading.

Below are some important aspects of the Amazon report and it is said.

1. Amazon Transaction Trading had another solid neighborhood

Revenues from the American Amazon segment (61% of total revenue) increased 18% to 44,1 billion dollars, while the international segment saw revenue rising 15% to $ 20.83 billion. Income from North America slightly failed an agreement of 44.23 billion dollars, but it was derived from a deficit of more than $ 300 million in revenues from "physical stores" (rather more than in e-commerce revenue streams).

International revenues reached a consensus of 20.49 million dollars. The growth benefitted from India's holiday calendar in relation to a year ago, but also recorded a 4 percentage point impact on foreign exchange changes. In the first quarter, Amazon expects the currency to have a negative impact total the growth of revenue by 2.1 percentage points.

The US unit is now highly profitable: its GAAP operating profit increased 33% to $ 2.25 billion. The international segment (in the midst of major Indian investments) posted a loss of $ 642 million, after seeing a loss of 919 million dollars in the previous year.

2. The AWS Juggernaut Rolls on

Amazon Web Services revenue (AWS) increased 45% to $ 7.43 million, exceeding a consensus of $ 7.29 billion. The operating profit of the segment grew 61% to $ 2.18 billion.

As the announcements were made at its November meeting: the Invent conference came home, AWS is still one of a kind among public cloud platforms, even if there is still room for Microsoft (MSFT) and Alphabet / Google (GOOGL) (but not many others) prosper, and for various reasons, business adoption of public cloud infrastructure continues to grow rapidly.

Amazon.com, Microsoft and Alphabet are stakes from Jim Cramer Action Alerts PLUS member Club. Do you want to be notified before Jim Cramer buys or sells AMZN, MSFT or GOOGL? More information now.

3. The growth of spending was moderate, but this could change soon

Continuing with a trend in Q2 and Q3, the moderate growth of spending (given the growth of Amazon revenue) boosted the EPS. Although marketing investment increased 41% to 4.9 billion dollars and technology / content spent 21% to $ 7.7 billion, compliance spending increased only from 12% to $ 10 billion and G & A spent only 7% to 1,100 million dollars.

In the same way, Amazon's total cost of capital only increased by 17% (much lower than that of many other technology giants). Property purchases and equipment through capital leases (fueled by AWS) increased 33%, up to $ 3.68 billion, but direct purchases of real estate and equipment (driven by investments in retail infrastructure) rose only 3% to 3.73 billion dollars.

However, in the call, Olsavsky called the growth of 17% capex "a small number for us" given the growth of AWS and Amazon e-commerce operations, as well as their efforts to expand, Go to new regions. Called 2018, a year in which Amazon only increased its compliance and delivery metrics by 15% and its workforce by 14%, "a year of lighter investment" for both fixed investments as well as for staff.

"I would expect to increase investments compared to 2018, and we have reflected what we see so far in the first quarter of our guide," he said. Certainly, Amazon's story shows that it is not shy to approach the pace of investment when it sees growth opportunities that justify doing so.

4. Amazon thinks that the new e-commerce rules in India introduce uncertainty

Recently, the Indian government began banning foreign online retailers, who no longer could sell products directly, selling products from market vendors that had a capital stake, as well as in exclusive agreements surprising with suppliers. This led to Amazon to extract numerous articles from its Indian website, including its Echo speakers.

When asked about India in the call, Olsavsky said Amazon's Q1 focus reflects "the best estimate" for India's sales. But he added that "there is a lot of uncertainty about the impact of the change in government regulations in the e-commerce sector," and made it clear that Amazon does not think that the changes in the rule are positive for Indian consumers .

When asked later whether the changes in the rule would lead to Amazon, which has invested billions in India, to change its strategy in the country, Olsavsky said that Amazon still "[feels] very good about India's long-term prospects. "However, he also said that Amazon" is still evaluating the situation. "

5. Continuous expansion of the driving margin expansion, but at a slower rate

In addition to reporting an AWS growth of 45%, Amazon reported that its services from third-party vendors increased 27% to 13.38 million dollars, and their revenues increased by 25 % up to 3,955 million dollars. The company's "Other" revenues, driven largely by Amazon's advertising activity, officially increased 95% to $ 3.39 million and grew around from 38% after billing the impact of a recent accounting change. To compare, the revenue from Amazon's "online stores", which cover direct e-commerce sales, grew 13% to $ 39,800 million.

Continued growth in revenue streams of high margin services as a percentage of revenue allowed to increase the gross margin of Amazon at 1.8 percentage points per year to 38.1% . However, this is a smaller increase than the 4.6 points increase observed in the third quarter.

There were some factors at work here. The "other" revenues were somewhat below expectations; the subscription income had an approximate impact of $ 300 million of a change in accounting related to the way in which the main subscriptions were recognized; Amazon's free delivery promotion increased shipping costs; the company approved the 1st year of the acquisition of Whole Foods (a relatively low margin business) in August; and the strong sales of Amazon's own devices, which the company deals with as leader of losses, had an impact on the margin.

6. The incomes of bricks and deaths of Whole Foods ended … But Amazon has an explanation

Amazon's "physical stores" revenues, which for the time come mainly from Whole Foods, fell 3% to 4,400 million dollars and lost a consensus of 4.78 billion dollars. However, Olsavsky noted that Amazon recorded 5 days less revenue from Whole Foods this year due to differences in fiscal calendars prior to the acquisition of Amazon and Whole Foods, and That revenue in physical stores does not include Whole Foods online delivery and delivery orders.

To adjust to these factors, Whole Foods revenue is estimated to represent about 6%.

7. The final free cash flow grew strongly

Although time will tell if this tendency continues in the midst of a cost recovery, free cash flows (FCF) to 12 months after the host, less reimbursements of the main # 39, leasing and assets acquired in capital leases increased to $ 8.4 billion by the end of 2018. from $ 5.4 billion at the end of Q3 and negative to $ 1.5 billion at the end of 2017.

In addition to the growth of profits, FCF benefited from a 28% increase in the unearned income balance of Amazon, driven by revenue related to the first and other subscription services that still I have not recognized: at $ 6.54 billion.

The Street Eric Jhonsa previously covered the Amazon report and called through a live blog.

Mark a Touchdown with the Big Game Special of Jim Cramer

Get access to the best selections of securities from the Jim Cramer investment portfolio by running a two-minute simulacrum on our Big Game Special on Action Alerts PLUS, Jim's VIP club for investors. Sign up now until February 4 and receive a 58% discount on the normal subscription price. Now it's a real touch!


Source link