2Q19 Results

Amazon.com reported 2Q19 revenues of $63.4 billion, up 19.8% year over year and in line with the consensus estimate.

EPS was $5.22, up 3.0% year over year and below the $5.56 consensus estimate.

Results by Segment

• North America revenues were $38.7 billion, up 20.0% year over year, posting operating income of $1.6 billion, compared to $1.8 billion in the year-ago quarter.
• International revenues were $16.4 billion, up 8.9% year over year, posting an operating loss of $601 million, compared to a loss of $494 million in the year-ago quarter.
• Amazon Web Services (AWS) revenues were $8.4 billion, up 37.3% year over year, posting an operating income of $2.1 billion, compared to $1.6 billion in the year-ago quarter.

Other Segment Data

• Online store revenue was $31.1 billion, up 14.3%.
• Physical store revenue was $4.3 billion, up 0.4%.
• Third-party seller service revenue was $12.0 billion, up 23.3%.
• Subscription service revenue was $4.7 billion, up 37.2%.
• Other revenue was $3.0 billion, up 36.8%.

Prime Day 2019 (fell in 3Q)

• The 48-hour Prime Day in 2019 was the largest shopping event in Amazon history with more than one million deals, according to the company.
• Sales surpassed Amazon’s previous Black Friday and Cyber Monday sales combined.
• Prime Day Concert presented by Amazon Music was headlined by Grammy award-winning artist Taylor Swift.
• Amazon reported that more Prime members joined on July 15 than on any previous day, and almost as many on July 16.

Technology Capabilities

• Amazon and Google launched the official YouTube app on Fire TV devices and Fire TV Edition smart TVs, and released the Prime Video app for Chromecast, Chromecast built-in devices and Android TV devices.
• Amazon continued to expand Alexa’s features and capabilities, launching Alexa Guard, a home security feature and hundreds of third-party Alexa built-ins.
• Fire TV now has more than 34 million active users worldwide accrding to Amazon and continues to be the number one streaming media player family in the US, UK, Germany, Japan and India.

Market Expansion

• AmazonFresh expanded to Las Vegas with options for one- and two-hour delivery.
• The company opened two new Amazon Go stores in New York City, which offers customers a checkout-free experience.
• Amazon Beauty announced HAUS Laboratories, an exclusive makeup collection co-created by Lady Gaga and makeup artist Sarah Tanno.
• Amazon launched Prime in the United Arab Emirates, offering free delivery on millions of items.
• Amazon India introduced the packaging-free shipment program in nine cities.

Whole Foods

• Whole Foods Market grocery delivery is now available in nearly 90 metros in the US, offering Prime customers free delivery in as fast as an hour on thousands of items.
• Amazon connected Prime Day with Whole Foods Market deals, offering a $10 credit online for every $10 spend in Whole Foods stores.

Delivery

• Free one-day delivery is now available to Prime members on more than ten million items and consumers are responding positively, according to the company.
• Amazon announced Prime Air’s new drone delivery design.
• Amazon introduced Amazon Flex in India, a program for local partners to increase delivery speed for customers.

AWS

• A number of organizations are leveraging AWS to optimize business: the National Association for Stock Car Auto Racing (NASCAR) chose AWS and Amazon SageMaker as its standard for cloud-based machine learning and artificial intelligence workloads; Emirates NBD (the largest bank by assets in the Middle East) is using AWS machine learning services to customize customer service. Hyundai launched a new high-performance computing (HPC) system using AWS to accelerate its digital transformation.
• AWS announced the general availability of a number of technologies including but not limited to: AWS Ground Station, a service that allows customers to control their satellites using AWS and download data; Amazon Managed Blockchain, a service that allows multiple parties to execute transactions and maintain a cryptographically verifiable record; Amazon Textract, a fully-managed machine learning service that automatically extracts text and data.

Outlook

Amazon offered the following guidance for 3Q19:

• Net sales of $66.0-70.0 billion (up 17-24%), in line with the consensus estimate. This figure includes an unfavorable 30 bps impact from foreign exchange.
• Operating income of $2.1-3.1 billion versus $3.7 billion and below the $3.7 billion consensus estimate.