Amazon's Q2 Earnings: A Mixed Bag

E-commerce titan (NASDAQ: AMZN) reported second-quarter results this Thursday afternoon. The report easily exceeded the midpoint of management's revenue guidance while falling a tad short of operating income expectations, making for a mixed impression overall.

Amazon's second-quarter results: The raw numbers

Metric Q2 2019 Q2 2018 Change
Total net sales $63.4 billion $52.9 billion 20%
Net income $2.63 billion $2.53 billion 4%
GAAP earnings per share (diluted) $5.22 $5.07 3%

Data source: Amazon. GAAP = generally accepted accounting principles.

What happened with Amazon this quarter?

Three months ago, Amazon guided its second-quarter revenue toward roughly $61.5 billion. The actual top-line result exceeded that guidance projection by 3%.

Further down Amazon's income statement, management had aimed its operating income at approximately $3.1 billion. Here, the company delivered a $3.01 billion result -- 3% below the midpoint of a roomy guidance range.

The e-commerce giant also reported $9.12 billion of operating cash flows and $2.64 billion in capital expenses for the second quarter, which works out to $6.48 billion of free cash flows. That's a 103% year-over-year increase. Amazon's stated long-term goal is to "optimize free cash flows," giving this metric a seat of paramount importance.

North American retail sales rose 20% above the year-ago period's, landing at $38.7 billion. International sales of $16.4 billion delivered a 12% year-over-year boost. Meanwhile, the Amazon Web Services segment (AWS) posted 37% sales growth, stopping at $8.38 billion.

A smiling woman holds a red credit card next to her laptop.

Image source: Getty Images.

Beyond the dry figures

The Amazon Prime free shipping program upgraded the age-old promise of two-day delivery to next-day shipping across the entire system, including in the just-added United Arab Emirates market.

"Free one-day delivery is now available to Prime members on more than ten million items, and we're just getting started," said CEO Jeff Bezos in a prepared statement. "We've received a lot of positive feedback and seen accelerating sales growth."

On that note, the Amazon Prime Day event in early July were the two busiest days of Prime sign-ups in the program's history. Management did not provide an updated tally of Prime members, which was last reported as "more than 100 million" in the spring of 2018.

Looking ahead

Based on general business trends and on the record-setting Prime day event, Amazon provided the usual set of next-quarter guidance ranges.

At the midpoint of each range, Amazon expects to see third-quarter revenue near $68 billion while operating profits should stop in the neighborhood of $2.6 billion. These targets compare to $56.4 billion in top-line revenue and $3.7 billion of operating income in the same period of fiscal year 2018.

Our five highest-conviction stocks
The seasoned portfolio managers at Motley Fool Asset Management have over 50 years of combined professional investing experience. But they're not your typical Wall Street types. They're focused on helping investors like YOU. That's why they just revealed their 5 highest-conviction stocks, which you can get absolutely free in a new special report. But beware, most of these aren't household names...  

Get the stock report today!

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More