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What: Shares of Amazon.com (NASDAQ:AMZN) raced 23.5% higher in July, according to data from S&P Capital IQ. The stock was already up 10% by July 23, floating higher on analyst upgrades and new business ideas. But the stock really caught fire when Amazon reported second-quarter results on July 23, crushing both analyst estimates and its own guidance on both the top and bottom lines.

So what: Heading into the second quarter, the high end of Amazon's revenue guidance stopped at $22.8 billion and analysts would have settled for $22.4 billion. Instead, the e-commerce giant delivered sales of $23.2 billion. That surplus revenue trickled all the way down Amazon's income statement, resulting in $464 million of operating income and adjusted earnings of $0.19 per share. According to earlier guidance, operating income should have been no more than $50 million. Analysts only expected earnings near $0.14 per share.

Amazon shares opened 20% higher the next morning.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Now what: In general, Amazon produces tons of cash but very limited bottom-line earnings. Currently, the company can look back at $4.4 billion of trailing free cash flows, up from $1.0 billion a year ago and leagues ahead of trailing GAAP earnings. In fact, despite this quarter's earnings surprise, Amazon has lost $188 million during the last four quarters in traditional earnings terms.

That's an extremely tax-efficient way to run a business, made possible by very large real estate holdings and other assets subject to depreciation over many years. The company only paid a total of $188 million in cash taxes across the last four quarters.

"We remain heads-down focused on driving a better customer experience through price, selection, and convenience," said Amazon CFO Brian Olsavsky in the second-quarter earnings call. "We believe putting customers first is the only reliable way to create lasting value for shareholders."

Judging by the final results, that strategy is working wonders.

Anders Bylund has the following options: short January 2016 $320 puts on Amazon.com and long January 2016 $320 calls on Amazon.com. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days.

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