Amazon (AMZN -2.69%) is slated to report its first-quarter 2022 results after the market close on Thursday, April 28. An analyst conference call is scheduled for the same day at 5:30 p.m. ET.
The e-commerce and technology behemoth is heading into its report on a mixed note. Last quarter, its earnings crushed the Wall Street consensus estimate, while its revenue was in line with expectations. However, in the prior quarter (the third quarter of 2021), Amazon missed the consensus estimate for both the top and bottom lines, with the profit miss quite large. And in the quarter before that one, the company also fell short of the Street's revenue expectation.
In 2022, Amazon stock is performing roughly in line with the broader market. It's down 9% through April 14 (April 15 was a market holiday), while the S&P 500 and Nasdaq Composite indexes (including dividends) are underwater by 7.5% and 14.5%, respectively.
Here's what to watch in Amazon's upcoming report.
Image source: Getty Images.
Amazon's key numbers
| Metric | Q1 2021 Result | Amazon's Q1 2022 Guidance | Amazon's Projected Change | Wall Street's Q1 2022 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|---|---|
| Revenue | $108.5 billion | $112 billion to $117 billion | Approximately 3% to 8% | $116.3 billion | 7.2% |
| Adjusted earnings per share (EPS) | $15.79 | N/A | N/A | $8.48 | (46%) |
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 first-quarter operating income to range from $3 billion to $6 billion, which represents a decline of 66% to 48% from the year-ago period.
For context, last quarter -- the big holiday quarter -- Amazon's revenue increased 9% year over year to $137.4 billion. That result was on target with the $137.4 billion Wall Street had expected and near the high end of the company's guidance range of $130 billion to $140 billion. By segment, sales in North America and Amazon Web Services rose 9% and 40%, respectively, while those in international edged down 1%.
Last quarter's net income was $14.3 billion, or $27.75 per share, up 97% year over year. This result demolished the analyst consensus estimate of $3.58 per share. But that's because the bottom line got a big boost from a pre-tax valuation gain of $11.8 billion from Amazon's common stock investment in electric vehicle maker Rivian Automotive, which held its initial public offering (IPO) in November.
Supply chain issues
Like other companies that import product, Amazon has been dealing with pandemic-driven global supply chain issues, which have increased costs. Its costs have also risen because of higher employee wages stemming at least in part from a tight labor market.
The company has been doing a good job controlling the impact on its results of these macroeconomic issues. Moreover, on last quarter's earnings call, CFO Brian Olsavsky said management expected supply chain issues to have less of an impact on first-quarter results relative to recent results.
Second-quarter 2022 guidance
The market looks forward, so its reaction to Amazon's upcoming report will probably hinge at least as much on second-quarter guidance as on first-quarter results.
The company provides guidance for revenue, but not earnings. However, its outlook for operating income often gives investors a general idea as to what year-over-year percentage change the company expects on the bottom line.
For Q2, Wall Street is currently modeling for Amazon's revenue to increase 12% year over year to $126.4 billion and adjusted EPS to decline 26% to $11.22.
Investors should note that last year Amazon's annual Prime Day was held in Q2 (June). The company hasn't yet announced the date for this year's event. This is a big event so presumably has more than a negligible impact (which the company doesn't quantify) on results. In other words, year-over-year comparisons should be affected if Prime Day isn't held in the same quarter as last year.
