Please ensure Javascript is enabled for purposes of website accessibility

Amazon's Q2 Earnings: A Mixed Bag

By Anders Bylund – Jul 26, 2019 at 1:51AM

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

The e-commerce veteran also set third-quarter profit targets below the year-ago results.

E-commerce titan Amazon.com (AMZN 2.76%) reported second-quarter results this Thursday afternoon. The report easily exceeded the midpoint of management's revenue guidance while falling a tad short of operating income expectations, making for a mixed impression overall.

Amazon's second-quarter results: The raw numbers

Metric

Q2 2019

Q2 2018

Change

Total net sales

$63.4 billion

$52.9 billion

20%

Net income

$2.63 billion

$2.53 billion

4%

GAAP earnings per share (diluted)

$5.22

$5.07

3%

Data source: Amazon. GAAP = generally accepted accounting principles.

What happened with Amazon this quarter?

Three months ago, Amazon guided its second-quarter revenue toward roughly $61.5 billion. The actual top-line result exceeded that guidance projection by 3%.

Further down Amazon's income statement, management had aimed its operating income at approximately $3.1 billion. Here, the company delivered a $3.01 billion result -- 3% below the midpoint of a roomy guidance range.

The e-commerce giant also reported $9.12 billion of operating cash flows and $2.64 billion in capital expenses for the second quarter, which works out to $6.48 billion of free cash flows. That's a 103% year-over-year increase. Amazon's stated long-term goal is to "optimize free cash flows," giving this metric a seat of paramount importance.

North American retail sales rose 20% above the year-ago period's, landing at $38.7 billion. International sales of $16.4 billion delivered a 12% year-over-year boost. Meanwhile, the Amazon Web Services segment (AWS) posted 37% sales growth, stopping at $8.38 billion.

A smiling woman holds a red credit card next to her laptop.

Image source: Getty Images.

Beyond the dry figures

The Amazon Prime free shipping program upgraded the age-old promise of two-day delivery to next-day shipping across the entire system, including in the just-added United Arab Emirates market.

"Free one-day delivery is now available to Prime members on more than ten million items, and we're just getting started," said CEO Jeff Bezos in a prepared statement. "We've received a lot of positive feedback and seen accelerating sales growth."

On that note, the Amazon Prime Day event in early July were the two busiest days of Prime sign-ups in the program's history. Management did not provide an updated tally of Prime members, which was last reported as "more than 100 million" in the spring of 2018.

Looking ahead

Based on general business trends and on the record-setting Prime day event, Amazon provided the usual set of next-quarter guidance ranges.

At the midpoint of each range, Amazon expects to see third-quarter revenue near $68 billion while operating profits should stop in the neighborhood of $2.6 billion. These targets compare to $56.4 billion in top-line revenue and $3.7 billion of operating income in the same period of fiscal year 2018.

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
$117.57 (2.76%) $3.16

*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
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

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.