Amazon Soars Beyond All Expectations

Amazon (Nasdaq: AMZN) recently announced its first-quarter results that surpassed all market expectations and sent the stock soaring. The market is very pleased with its performance. Besides increasing the stock’s price target, analysts believe that it may well be on its way to becoming a trillion-dollar company. Clearly, the recent remarks by President Trump about the company did not hurt it at all.

Photo Credit: simone.brunozzi/Flickr.com

Amazon’s Financials

Amazon’s first quarter revenues grew an impressive 43% over the year to $51 billion, ahead of the market’s expectations of $49.8 billion. Excluding the currency movement, the revenues would have grown 39% over the year. Non-GAAP net income of $1.6 billion or $3.27 per share was also significantly ahead of the Street’s forecast of $1.26 per share. This was Amazon’s second consecutive profitable quarter. To help comprehend Amazon’s pace of growth, one must bear in mind that it was only in 2015 that the company had recorded the milestone of $100 billion in revenues.

By segment, net product sales increased 33% to $23.73 billion and net service sales increased 62% to $19.44 billion.

Amazon remained silent on the breakout of several of its segments. But it did reveal that Amazon Web Services revenue grew 49% to $5.44 billion, again significantly ahead of the $5.25 billion estimated by the market. Analysts estimate that AWS sales will double to $41 billion by 2020.

For the current quarter, Amazon projected revenues of $51-$54 billion, compared with the market’s forecast of $52.2 billion. Operating income is expected to come in at $1.1-$1.9 billion, compared with the Street’s projections of $1.01 billion.

Amazon’s Prime Growth

Till recently, Amazon had kept details of its Prime service membership base under wraps. But it recently announced that Prime now has nearly 100 million members. The company also announced a $20 price hike for the service. This was the first time it raised the price since 2014. In January this year, it had announced a price hike for the monthly membership, raising it from $10.99 a month to $12.99 a month. The annual membership will now cost $119.99 and will come into effect after June, as and when the members renew their membership.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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