Amazon reported a solid Q1, beating consensus on the top and bottom lines. Some of the EPS upside came from a slightly lower than expected tax rate.
Q2 adjusted operating margin guidance was somewhat weak: $200-$280mm, vs. $250mm consensus.*
Overall, the company seems to be in excellent health, especially considering the state of the economy.
Revenue: $4.9B vs $4.75B consensus
Reported Op Inc: $244mm vs. $155MM consensus.*
EPS: $0.41 vs. $0.31
Here’s JP Morgan’s Imran Khan’s summary of the results:
* Analysts use different operating income metrics for Amazon (see Imran Khan above and Mark Mahaney below). In our original post, we confused the two.
Mark Mahaney at Citigroup reviews what the Street’s looking for:
Op Inc: $268MM
And here’s Mark’s qualitative preview and “cheat sheet”:
We Anticipate an In-Line & In-Line Q1 — Based on intra-quarter channel checks, our model sensitivity work, our FX analysis, and our Macro read, we believe our Q1 estimates are reasonable and imply an In-Line quarter vs. the Street. The biggest swing variables, we believe, could be accelerated AMZN market share gains (Wal-Mart of Web effect), which could lead to rev upside, and a less promotional pricing
environment could cause Gross Margin and hence EPS upside. CAVEAT – as usual, visibility into AMZN Q results is limited.
Our AMZN fundamentals call for Q1 is negative. Given continued macro challenges, we anticipate that AMZN’s Q1 results will show deterioration with 23% Y/Y organic revenue growth (vs. 24% in Q4, although Q1 has a materially easier comp) and pro-forma operating margins that could be down 60 bps Y/Y. Key here will be whether fulfillment efficiencies that the company was able to achieve in Q4 will carry into Q1 given the lower revenue base (revenues down 29% sequentially) and whether AMZN could see marketing efficiencies given search pricing.
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