Amazon (AMZN -2.56%) announced yesterday that it will release its first-quarter 2021 results after the market close on Thursday, April 29. A conference call with analysts is scheduled for the same day at 5:30 p.m. EDT.
Most investors will probably be feeling optimistic about the e-commerce and technology giant's report. The company has a solid recent track record of easily beating -- often crushing -- its own guidance and Wall Street's consensus estimates on both the top and bottom lines.
In the last three quarters of 2020, Amazon's earnings exceeded analysts' expectations by a whopping 606% (second quarter), 67% (third quarter), and 95% (fourth quarter).
As with all four quarters of last year, investors can expect that the COVID-19 pandemic provided a boost to the company's Q1 revenue, and probably some degree of a headwind to its profits.
Amazon stock has gained about 52% over the one-year period through April 15, somewhat outpacing the S&P 500 index's 46% return.
Here's what to watch in Amazon's upcoming Q1 report.
Image source: Amazon.
Amazon's key numbers
| Metric | Q1 2020 Result | Amazon's Q1 2021 Guidance | Amazon's Projected Change | Wall Street's Q1 2021 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|---|---|
|
Revenue |
$75.5 billion |
$100 billion to $106 billion |
Approximately 33% to 40% |
$104.4 billion |
38% |
|
Adjusted earnings per share (EPS) |
$5.01 |
N/A |
N/A |
$9.47 |
89% |
Data sources: Amazon.com and Yahoo! Finance. Note: Amazon does not provide earnings guidance.
Management expects Q1 operating income to range from $3 billion to $6.5 billion, compared with $4 billion in the year-ago period. This outlook assumes about $2 billion of costs related to the pandemic. This guidance range represents operating income declining by as much as 25% to rising by as much as 63% year over year.
For revenue context, in the first, second, third, and fourth quarters of last year, Amazon's year-over-year revenue growth was 26%, 40%, 37%, and 44%, respectively. The third quarter's results understate the company's underlying performance, while the opposite is true for the fourth quarter. That's due to the annual Prime Day event being held in the fourth quarter of 2020, rather than in its usual spot in the third quarter, due to the pandemic.
Amazon has an easy earnings comparable, as in Q1 2020, EPS dropped 29% year over year. The decline was due to the company incurring big expenses at the start of the pandemic and from consumers being focused on just buying lower-margin necessities in the early stages of the crisis.
For additional context, last quarter, Amazon's revenue surged 44% year over year to $125.6 billion. Revenue in the North America, international, and Amazon Web Services segments rose 40%, 57%, and 28%, respectively. The top-line result breezed by the $119.7 billion Wall Street had expected, as well as the company's guidance range of $112 billion to $121 billion. EPS soared 118% to $14.09, crushing the consensus estimate of $7.19.
Second-quarter 2021 guidance
The stock market looks ahead, so any post-earnings release move in Amazon's stock will probably hinge more on the company's Q2 outlook than its Q1 results, relative to Wall Street's expectations. (Amazon provides guidance for revenue and operating income but not for earnings. However, its operating income outlook gives investors a ballpark idea as to what year-over-year percentage change the company expects on the bottom line.)
For Q2 2021, analysts are modeling for revenue to increase 21% year over year to $107.9 billion and adjusted EPS to rise about 5% to $10.78.
