Source: Company reports/Coresight Research

2Q18 Results

Amazon reported 2Q18 revenues of $52.9 billion, up 39.3% year over year and below the consensus estimate of $53.45 billion. Operating income was $3.0 billion, exceeding the company-issued guidance range of $1.1–$1.9 billion and up 375% year over year. EPS was $5.07, well above the consensus estimate of $2.49 and up a dramatic 1,166% year over year.

Details from the Quarter

• Amazon announced the Fire TV Cube, a 4K Ultra HD streaming media player with Alexa that allows customers to control the TV with their voice.
• Amazon announced Alexa for Hospitality, which brings the convenience of Alexa to hotels, vacation rentals and other hospitality locations.
• The Alexa Fund invested in new companies, including Aaptiv, DefinedCrowd, Novel Effect, Tact.ai and Sensible Object, and kicked off the second round of the Alexa Accelerator powered by Techstars, a program empowering entrepreneurs who are innovating voice technology.
• Amazon announced an offering that helps entrepreneurs build their own companies by delivering Amazon packages.
• Amazon and Ring announced Ring Alarm, a do-it-yourself home security system that offers professional monitoring for just $10 per month.
• The fourth annual Prime Day was Amazon’s biggest global shopping event ever, welcoming more new Prime members on July 16 than any other previous day in Amazon history. Members purchased more than 100 million products, and the best-selling items worldwide were the Fire TV Stick with Alexa Voice Remote and Echo Dot.
• Amazon Fashion launched Prime Wardrobe in the US, allowing Prime members to try clothing, shoes and accessories before they buy.
• Amazon continues to expand Prime member benefits internationally, launching Prime free same-day delivery in select cities in Italy and Spain; Prime Music and Prime Reading in Italy, Spain and France; and Prime Student in Japan.
• Amazon launched Prime in Australia, offering members unlimited free delivery on millions of local and international items, Prime Video, Prime Reading, Twitch Prime and access to exclusive deals.
• In its second year of availability, the number of databases migrated to AWS using the AWS Database Migration Service has grown to more than 80,000 databases.

Results by Segment

• North America revenues were $32.2 billion, up 43.8% year over year, and operating profit was $1.8 billion, compared with $0.4 billion in the year-ago quarter.
• International revenues were $14.6 billion, up 27.2% year over year, and operating loss was $0.5 billion, compared with a loss of $0.7 billion in the year-ago quarter.
• AWS revenues were $6.1 billion, up 48.9% year over year, and operating profit was $1.6 billion, compared with $0.9 billion in the year-ago quarter.

Outlook

• Amazon offered guidance for 3Q18 revenues of $54.0–$57.5 billion, up 23%–31%, and the $55.75 midpoint of which is above the consensus estimate of $54.24 billion. The EPS consensus estimate for 3Q18 is $2.49.