Amazon will be reporting first quarter 2017 earnings on April 27 after market close. Amazon’s revenue growth accelerated in 2016 as Amazon fired on all three cylinders: North America Retail, International Retail and Amazon Web Services. The question will be whether the new-found growth momentum, which saw them grow their top line by more than 25% during 2016, is here to stay, or whether Amazon will get weighed down by its own size.
Amazon’s First Quarter 2017 Guidance
• Net sales are expected to be between $33.25 billion and $35.75 billion, or to grow between 14% and 23% compared with first quarter 2016.
• Operating income is expected to be between $250 million and $900 million, compared with $1.1 billion in first quarter 2016.
Wall Street Expectation
The market is expecting Amazon to post consensus earnings per share of $1.13 and revenues of $35.31 billion during the first quarter, closer to the top end of Amazon’s revenue guidance.
One of the main reasons behind Amazon’s revenue numbers accelerating in 2016 was the company’s performance in North America. Despite being in a highly mature, intensely competitive market, Amazon still managed to expand its revenues by 22% during the fourth quarter of 2016. The international segment also woke up from its slumber, staying in the 23% to 26% range during the last four quarters.
Amazon Web Services
Amazon’s cloud unit continues to grow at a clip, and remains firmly in control of the Infrastructure as a Service (IaaS) industry despite competition nipping at their heels from every direction possible.
Their overall growth rate has come down, but a near 50% growth rate for a unit with more than $3.5 billion in quarterly revenues is nothing less than commendable. Expect the growth rate to come down meaningfully as Amazon Web Services keeps getting closer to 4 billion in quarterly revenues.
By tomorrow, we’ll know what Amazon has been up to this past quarter, and whether or not the recent downgrade by a Wall Street analyst is justified.
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