Amazon Marching Towards Trillion Dollar Market Cap

Amazon (NASDAQ: AMZN) reported a mixed second quarter last week. While it missed estimates of revenue, earnings estimates blew past estimates. This was the third straight quarter of profit above $1 billion.

 Amazon’s Financials

Amazon’s second-quarter revenues grew 39% to $52.9 billion, missing the market’s expectations of $53.41 billion. Net income increased a whopping twelve times to $2.5 billion or $5.07 per share from $197 million or $.40 per share a year ago, blowing past analyst expectations of $2.50.

Operating income increased to $3 billion, compared with $628 million a year ago. The company ended the quarter with cash balance of $17.6 billion. Its workforce increased 51% y-o-y and 2% q-o-q to record-high 575,700 employees.

By segment, net product sales increased 29% to $31.8 billion and net service sales increased 59% to $21 billion.

AWS revenues grew 49% over the year to $6.1 billion or about 11.5% of total revenue and beat estimates of $6 billion. AWS generated operating income of $1.64 billion or 55% of the total operating income of the company.

Revenue from subscription services like Prime increased 57% to $3.4 billion. Revenue from online stores grew 14% to $27.2 billion while revenue from physical stores, chiefly from its stores from the Whole Foods acquisition, was $4.3 billion. Revenue from third party seller services including commission, fulfillment, and shipping fees grew 39% to $9.7 billion.

Other revenue mainly from advertising grew 132% to $2.2 billion. Its North America revenue grew 44% to $32.1 billion, while international sales grew 27% to $14.6 billion.

For the third quarter, Amazon expects sales to grow 23%-31% to $54-$57.5 billion versus the analyst estimate of $55.6-$62.2 billion. Operating income for the quarter is expected to be $1.4-$2.4 billion versus analyst estimates of $1.5 billion.

Amazon’s New Offerings

A prime focus for Amazon has been Prime video and Fire TV. During the quarter, Amazon and Best Buy released the first of the next generation Fire TV Edition smart TVs to customers in the U.S. Amazon also announced the Fire TV Cube, a 4K Ultra HD streaming media player with Alexa that allows customers to control the TV with their voice.

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