Amazon.com, Inc. Crashes On Q4 Earnings, Analysts See Some Light

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Amazon.com, Inc. Crashes On Q4 Earnings, Analysts See Some Light

Amazon.com, Inc. (NASDAQ:AMZN) announced earnings for Q4 2015 Thursday after market close. The EPS of $1 and revenue of $35.7 billion both came in below analyst estimates. Net sales fromAmazon Web Services came in at $2.4 billion, up from $1.4 billion the previous year, and the company reported a 51% growth in prime users. Shares are trading down 13.75% to $548.00 a share in after hours trading.

On the conference call the tech giant stated:

For Q1 2016, we expect net sales of between $26.5 billion and $29 billion.
— guidance anticipates approximately 130 basis points of unfavorable impact for foreign exchange rates. GAAP operating income to be between $100 million and $700 million compared with $255 million in first quarter 2015. This includes approximately
$600 million for stock-based compensation and other operating expenses net. We anticipate consolidated segment operating income, which excludes stock-based compensation and other operating expense net to be between
$700 million and $1.3 billion compared with $706 million in the first quarter of 2015. We are grateful to our customers and remain heads-down focused on driving a better experience.

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We believe putting customers first is the only reliable way to create lasting value for shareholders.

Some analysts see the results in a more positive light.

Jefferies on Amazon:

Amazon’s 4Q15 print came in below Street expectations on all points while guidance for 1Q16 was mixed – in line top line but soft margins. Once again AWS results exceeded our and Street expectations for revenue and profitability (with 29% op margin in 4Q15). WW unit growth remained at a healthy +26% Y/Y (vs. +26% in 3Q15, +22% in 2Q15, and +20% in 1Q15) while 3P accounted for 47% of total paid units

Results: Revenue increased +22% Y/Y (+26% ex-FX) to $35.75B, below our $36.50B and Street’s $35.91B, partially due to a negative FX impact of $1.2B. GAAP EPS of $1.00 came in below Street’s estimate of $1.55. GAAP Operating Income of $1.11B was lower than Street’s $1.25B. Gross margin of 31.9% came in below Street’s 32.7%. GAAP Operating Income margin of 3.1% was lower than Street’s 3.5%. Non-GAAP Operating Income margin of 4.9% was below Street’s 5.1%.

Goldman Sachs

4Q results. NA revenue increased 24.0% yoy to $21.5bn, roughly in line with our estimate of $22.0bn. NA operating income margin rose to 4.7% from 4.2% in the year ago period. On an FX-neutral basis, International
revenue grew +22% yoy vs. +24% in 3Q, to reach $11.8bn, compared to our estimate of $11.9bn. The company reported a $1.2bn impact from FX or nearly 400bps.
AWS. Amazon reported AWS revenue of $2.4bn, +69.4% yoy vs. our estimate of $2.5bn with operating margins of 28.6%, up from 25.0% in 3Q.

UBS

For Q1 2016, Amazon guided to revenue in the range of $26.5b – 29.0b (vs. our estimate of $28.12b & Street estimate of $27.73b), equates to 17%-28% growth compared to the first quarter 2015 – the F/X impact on the revenue guidance is unknown. GAAP Operating Income is expected to be between $100mm and $700mm (vs. our estimate of $937mm & Street estimate of $701mm). This guidance includes approx. $600mm for stock-based compensation and amortization of intangible assets.

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