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Amazon Q2 2021 Earnings Report Recap

AMZN beat on earnings but missed on revenue

Key Takeaways

  • Amazon Web Services (AWS) revenue surpassed analyst expectations, growing at its fastest pace since Q2 FY 2019.
  • AWS is Amazon's high-margin cloud computing business.
  • It was the company's first earnings report with founder Jeff Bezos no longer the CEO.
Amazon Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $15.12 $12.47
Revenue Miss $113.1B $115.4B
AWS Revenue Beat  $14.8B $14.2B

Source: Predictions based on analysts' consensus from Visible Alpha

Amazon (AMZN) Financial Results: Analysis

Amazon.com, Inc. (AMZN) reported mixed results in its Q2 FY 2021 earnings press release. Earnings per share (EPS) beat estimates, up 46.8% compared to the year-ago quarter. Amazon's revenue missed analyst forecasts but was up 27.2% year over year (YOY). Amazon Web Services (AWS) revenue exceeded consensus estimates. The company's shares fell more than 5% in extended trading. Over the past year, Amazon's shares have provided a total return of 18.6%, below the S&P 500's total return of 35.6%.

AMZN AWS Revenue

Amazon's AWS revenue rose 37.0% compared to the year-ago quarter, its fastest pace since Q2 FY 2019. AWS is Amazon's cloud-computing platform. It offers developers a range of on-demand technology services, such as compute, storage, database, analytics, machine learning, and other services. These services are primarily used by start-ups, enterprises, government agencies, and academic institutions.

Amazon's AWS business generates much higher margins than its e-commerce business. In the second quarter, Amazon's global retail sales- and subscription-based business segments generated about 87% of the company's total revenue, while AWS accounted for a mere 13%. However, AWS accounted for 54% of total operating income for the year, making it Amazon's main profit generator. At the end of the previous quarter, AWS led the $150-billion global cloud market with a 32% share, well ahead of both Microsoft Corporation's (MSFT) Azure and Alphabet Inc.'s (GOOGL) Google Cloud.

"AWS has helped so many businesses and governments maintain business continuity, and we've seen AWS growth reaccelerate as more companies bring forward plans to transform their businesses and move to the cloud," said Andy Jassy, Amazon's new CEO. Jassy replaced founder Jeff Bezos, who stepped down on July 5. Jassy is a company veteran who played a crucial role in creating AWS.

AMZN Outlook

Amazon expects its third quarter net sales to be between $106.0 billion and $112.0 billion, implying growth of between 10% and 16% compared to Q3 FY 2020. It expects operating income to be between $2.5 billion and $6.0 billion, compared with $6.2 billion in Q3 FY 2020.

Amazon's next earnings report (for Q3 FY 2021) is estimated to be released on Oct. 27, 2021.

Article Sources

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  2. Amazon.com Inc. "AMAZON.COM ANNOUNCES SECOND QUARTER RESULTS," Page 11. Accessed July 29, 2021.

  3. Visible Alpha. "Financial Data." Accessed July 29, 2021.

  4. CNBC. "Amazon posts third $100 billion quarter in a row, but still misses expectations." Accessed July 29, 2021.

  5. TradingView. "Price Chart: AMZN and S&P 500." Accessed July 29, 2021.

  6. Amazon.com Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 43. Accessed July 29, 2021.

  7. Amazon.com Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 65. Accessed July 29, 2021.

  8. Statista. "Amazon Leads $150-Billion Cloud Market." Accessed July 29, 2021.

  9. Amazon.com Inc. "AMAZON.COM ANNOUNCES SECOND QUARTER RESULTS," Page 1. Accessed July 29, 2021.

  10. Wall Street Journal. "Amazon Primed Andy Jassy to Be CEO. Can He Keep What Jeff Bezos Built?" Accessed July 29, 2021.

  11. Amazon.com Inc. "AMAZON.COM ANNOUNCES SECOND QUARTER RESULTS," Page 7. Accessed July 29, 2021.

  12. Yahoo! Finance. "Earnings Calendar: AMZN." Accessed July 29, 2021.

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