Amazon (AMZN 1.30%) is slated to report its fourth-quarter and full-year 2021 results after the market close on Thursday, Feb. 3. An analyst conference call is scheduled for the same day at 5:30 p.m. ET.
The period to be reported on is the second quarter that Andy Jassy has been CEO of the e-commerce and technology giant.
Investors will probably be approaching Amazon's report with some apprehension. Last quarter, the company missed Wall Street's expectations for both revenue and earnings, with the bottom-line miss a sizable one. That was the second consecutive quarter that revenue fell short of the analyst consensus estimate.
In 2022, Amazon stock has declined 9.1% through Jan. 20. Naturally, this isn't the kind of absolute performance investors want to see, but shares are performing roughly in line with the market. The S&P 500 and the tech-heavy Nasdaq Composite (which is arguably the better comparable for Amazon) are down 5.9% and 9.5%, respectively, over the same period.
Here's what to watch in Amazon's upcoming report.
Image source: Getty Images.
Amazon's key quarterly numbers
| Metric | Q4 2020 Result | Amazon's Q4 2021 Guidance | Amazon's Projected Change | Wall Street's Q4 2021 Consensus Estimate | Wall Street's Projected Change (Decline) |
|---|---|---|---|---|---|
|
Revenue |
$125.56 billion |
$130 billion to $140 billion |
Approximately 4% to 12% |
$137.72 billion |
9.7% |
|
Earnings per share (EPS) |
$14.09 |
N/A |
N/A |
$3.74 |
(73%) |
Data sources: Amazon.com and Yahoo! Finance. Note: Amazon does not provide earnings guidance.
While Amazon doesn't provide guidance for earnings, it does so for operating income. Management expects fourth-quarter operating income to range from $0 to $3 billion, compared with $6.9 billion in the year-ago period. This guidance range represents operating income declining by about 100% to 57% year over year.
The world's e-commerce leader faced tough year-over-year comparables in the fourth quarter. In the year-ago period, revenue surged 44% and earnings per share soared 118% year over year. The fourth quarter of 2020 was particularly strong for two main reasons. First, the pandemic was raging and vaccines had only begun to roll out at the very tail end of the quarter/year. Second, Amazon held its annual Prime Day event in the fourth quarter of 2020 (October), whereas in 2021, this event took place in the second quarter (June).
In last quarter's earnings release, Jassy provided another reason -- increased costs -- that the company's bottom-line results are expected to decline significantly from the year-ago period:
In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs -- all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It'll be expensive for us in the short term, but it's the right prioritization for our customers and partners.
For context, in the third quarter, Amazon's revenue increased 15% year over year to $110.8 billion, missing the $111.6 billion the Street had expected, but coming in close to the high end of its guidance range of $106 billion to $112 billion. By segment, sales in North America, international, and Amazon Web Services rose 10%, 16%, and 39%, respectively. EPS dropped 51% to $6.12. That result fell considerably short of the analyst consensus estimate of $8.92.
First-quarter 2022 guidance
Amazon provides guidance for revenue, but not earnings. However, its outlook for operating income often gives investors a ballpark idea as to what year-over-year percentage change the company expects on the bottom line.
For the first quarter of 2022, analysts are currently modeling for Amazon's revenue to increase about 12% year over year to $121.2 billion and EPS to fall 33% to $10.53.
