Please ensure Javascript is enabled for purposes of website accessibility

Firing on All Cylinders, Amazon.com Aced This First-Quarter Report

By Anders Bylund - Updated Apr 27, 2018 at 1:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's hard to highlight any particular growth drivers in the online retailer's first-quarter report when everything just works.

Online retailer and cloud-computing giant Amazon.com (AMZN 2.07%) reported first-quarter results after the closing bell on Thursday. The company obliterated its own revenue and operating income targets with broad-based growth across all three of its reporting segments.

Here's a closer look at Amazon's first quarter.

Amazon's first-quarter results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$51.0 billion

$35.7 billion

43%

Net income

$1.63 billion

$724 million

125%

GAAP earnings per share (diluted)

$3.27

$1.48

120%

Data source: Amazon.

What happened with Amazon this quarter?

It's fair to say that Amazon was firing on all cylinders this time. The upper limit of this period's revenue guidance stopped at $50.8 billion. Operating income wasn't expected to rise above $1.0 billion, but nearly doubled year over year, to $1.9 billion.

Online retail sales rose 13% year over year, to $26.9 billion, supplemented by $4.3 billion in revenue collected through physical stores that weren't part of the Amazon empire a year ago. Taken together, that's a 36% revenue increase from Amazon's own retailing operations.

At the same time, third-party sellers sent 44% higher commissions and fulfillment fees to Amazon, at $9.3 billion. Subscription services notched a 60% boost, to $3.1 billion, and Amazon Web Services (AWS) increased sales by 49%, to land at $5.4 billion.

Breaking the quarter down from a different angle, North American sales rose 46% higher, to $30.7 billion, including contributions from the Whole Foods acquisition. International sales grew 34% larger, at $14.9 billion.

The company recently announced that its Prime shipping and video service had reached 100 million members worldwide. This report added no color or new numbers to that disclosure. Investors can always dream of consistent disclosure on this point, can't we?

Cartoon-style desktop computer showing the AWS logo on its screen.

Image source: Getty Images.

What management had to say

In a prepared statement, Amazon CEO Jeff Bezos explained how Amazon Web Services became the massive profit center we see today. "AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down," Bezos said. "As a result, the AWS services are by far the most evolved and most functionality-rich."

At the moment, the strongest growth drivers within the AWS package consist of machine-learning tools and the Amazon Aurora database service. Both of these product lines nearly tripled their customer counts over the last year.

Looking ahead

Amazon provided some guidance for the second quarter in its familiar collection of sweeping terms. Net sales should land between $51 billion and $54 billion, representing 38% year-over-year growth at the midpoint. Foreign exchange trends are providing a tailwind of approximately $1.2 billion here.

The operating income target was set at $1.5 billion, give or take $400 million. That's up from $628 million in the year-ago period.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$143.55 (2.07%) $2.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.