Amazon's Q2: Sales up 23 percent, misses the mark on earnings

Amazon's Q2: Sales up 23 percent, misses the mark on earnings

Summary: UPDATED: During the shareholders call, CFO Tom Szkutak batted a few questions about more specific AWS revenue and growth figures.

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Following the debut of a near endlessly rumored Kindle-branded phone, Amazon reported second quarter earnings after the bell on Thursday.

The Internet giant reported a net loss of $126 million (statement), or 27 cents per share, compared to just two cents, the year prior.

However sales were up with a revenue of $19.34 billion, an increase of 23 percent year-over-year.

Wall Street was expecting a loss at 14 cents per share on a revenue of $19.34 billion.

In reaction to a much larger-than-projected loss, Amazon shares started to tumble in after-hours trading by as much as five percent.

Focusing on the slew of products the Seattle-headquartered corporation unveiled during the second quarter (and even the last few weeks), CEO Jeff Bezos reflected on the quarter in prepared remarks:

We’ve recently introduced Sunday delivery coverage to 25% of the U.S. population, launched European cross-border Two-Day Delivery for Prime, launched Prime Music with over one million songs, created three original kids TV series, added world-class parental controls to Fire TV with FreeTime, and launched Kindle Unlimited, an eBook subscription service. For our AWS customers we launched Amazon Zocalo, T2 instances, an SSD-backed EBS volume, Amazon Cognito, Amazon Mobile Analytics, and the AWS Mobile SDK, and we substantially reduced prices. And today customers all over the U.S. will begin receiving their new Fire phones — including Firefly, Dynamic Perspective, and one full year of Prime — we can’t wait to get them in customers’ hands.

Amid another round of price cuts this spring, AWS announced the availability of R3 instances, the next generation of the tech giant's cornerstone Elastic Compute Cloud (EC2) memory-optimized instances.

Earlier this month, AWS welcomed Zocalo, a fully-managed enterprise storage and sharing service with administrative controls and feedback capabilities, during the Amazon Web Services 2014 Summit in New York City.

Amazon famously does not break out sales results for its cloud unit, instead folding it in to the "Other" category with various advertising products. Domestically, this vertical generated $1.168 billion in revenue, up from 844 million during the second quarter of 2013.

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Furthermore, the AWS team grew "by thousands of employees this past year," according to the report.

For the current quarter, analysts expect another loss from Amazon, albeit one cut in half at seven cents per share on a revenue of roughly $20.84 billion.

Amazon followed up with a revenue guidance range of $19.7 billion to $21.5 billion, translating to sales growth of 15 to 26 percent.

UPDATE: During the shareholders call, CFO Tom Szkutak batted a few questions about more specific AWS revenue and growth figures.

Highlighting North America as AWS' strongest region (in terms of sales versus datacenter footprint), Szkutak revealed that AWS saw usage growth climb 90 percent year-over-year in Q2.

But, much like the rest of tech and business worlds, Amazon is also doubling down to expand its reach in China.

In terms of China, you know we are continuing to invest on the half of customers there, obviously trying to make the experience even better for customers. In terms of improved in stock levels, we've spent certainly added a lot of fulfillment capacity over time in China, and we're doing a lot of interesting things to better serve customers in China.

Slides via Amazon Investor Relations

Topics: Cloud, Amazon, Apps, Data Management, Web development

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5 comments
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  • Nothing to worry about ...

    ... ever since 2001, Amazon has rewarded its shareholders with share price rises, much more than dividends.

    It's tax-efficient to re-invest, and as Rachel has pointed out, they are an ambititious company, investing right, left and centre.

    Sure, the share price has dipped today - but that's the lack mof imagination of the finacial institutions, who never understood Amazons tactics.

    This year, of course, they are investing huge amounts in TV programming, which won't pay back for a while, and they're investing in upgrading their distribution systems in many countries.

    They'll be just fine ;-)
    Heenan73
    • Not the best way to look at it

      Looking a share prices isn't necessarily a good strategy especially with high visibility tech. Much of them are in bubbles that makes the actual value of the share significantly less than what you're paying. The dips and jumps you see are "cult stock" buyers that buy and sell not on fundamentals but on if news headlines sound good or bad along with speculators trying to guess what the cult stock buyers will do. Long term investors should look at real value as that's what will give you good long term return and can't easily vanish. Amazon is currently selling at 16x book value.
      Buster Friendly
    • Anyone can grow by selling at a loss

      Hopefully, this stock will go down to its deserved price between $10-$20 per share.
      Bruizer
      • Well, no

        Well, no, but lower 100s would be good.
        Buster Friendly
        • A P/E of 100 is good?

          With a forward P/E of (highly optimistic based on fantasy) of 90 is good?

          No, this is a $10-$20 stock at best.
          Bruizer