Amazon today reported earnings for its second fiscal quarter of 2019, including revenue of $63.4 billion, net income of $2.6 billion, and earnings per share of $5.22 (compared to revenue of $52.9 billion, net income of $2.5 billion, and earnings per share of $5.07 in Q2 2018). North American sales were up 20% to $38.7 billion, while international sales grew 12% to $14.9 billion.
Analysts had expected Amazon to earn $62.48 billion in revenue and report earnings per share of $5.57. The retail giant thus only slightly beat on revenue but fell short on earnings per share. The company’s stock was down about 1% in regular trading, and down 2% in after-hours trading. Amazon gave third quarter revenue guidance in the range of $66.0 billion and $70.0 billion, compared to a consensus of $67.27 billion from analysts.
AWS, subscriptions, and ‘other’
Amazon Web Services (AWS) continued to be the star of the show, growing 37% in sales to $8.4 billion. That growth figure is the first sub-40% growth rate since Amazon started breaking out AWS numbers. Nonetheless, AWS still accounted for about 13% of Amazon’s total revenue for the quarter. AWS is the cloud computing market leader, ahead of Microsoft Azure and Google Cloud.
Subscription services were up 37% to $4.7 billion. That would mainly constitute Amazon Prime, which the company is expanding to offer deals at places like Whole Foods.
Amazon’s “other” category, which mostly covers the company’s advertising business, was coincidentally also up 37% to $3 billion in revenue. The company knows plenty about what its customers want to buy, or even don’t want to buy, and it’s increasingly leveraging that for its advertising business.
Prime Day, re:MARS, and the Echo Show 5
“Customers are responding to Prime’s move to one-day delivery — we’ve received a lot of positive feedback and seen accelerating sales growth,” Amazon CEO Jeff Bezos said in a statement. “Free one-day delivery is now available to Prime members on more than 10 million items, and we’re just getting started. A big thank you to the team for continuing to make life easier for customers.”
Bezos unsurprisingly wanted to focus on Prime Day, which has been a massive success for the company. Prime Day, which actually falls in Amazon’s third quarter, was once again the largest shopping event in Amazon history, and this year sales from the two-day event (July 15 and July 16) surpassed the previous Black Friday and Cyber Monday combined. The two days were also the biggest ever for member signups.
In its earnings release, Amazon talked up the launch of its Echo Show 5 (our review). The company also highlighted other devices that launched this past quarter, including the Kindle Oasis, Fire 7, and Fire 7 Kids Edition. And of course, Alexa was mentioned many times, though Amazon is nowhere near ready to break out the voice assistant in its earnings reports.