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Amazon (AMZN) to Report Q2 Earnings: What's in the Cards?

Amazon AMZN is scheduled to report second-quarter 2021 results on Jul 29.

For the June quarter, the company expects net sales between $110 billion and $116 billion. The figure is anticipated to improve 24-30% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for net sales is pegged at $115.05 billion, indicating growth of 29.4 % from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for second-quarter earnings currently stands at $12.16 per share, which suggests an improvement of 18.1% from the year-ago quarter’s reported figure.

Earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 180.8%.

Amazon.com, Inc. Price and EPS Surprise

Amazon.com, Inc. price-eps-surprise | Amazon.com, Inc. Quote

Prime, Retail & Streaming Momentum to Note

Amazon’s expanding distribution network, and Prime-enabled fast delivery and robust grocery services are expected to have aided the performance of its online retail business in the second quarter.

Prime Free One Day service, Amazon Fresh, and robust two-hour delivery service of natural and organic products, such as meat and seafood, fresh produce and staples from the Whole Foods Market are expected to have driven customer momentum in the quarter under review.

In the second quarter, the company expanded its in-garage grocery delivery service called Key In-Garage Grocery Delivery to every location in the United States where it offers grocery delivery service.

This is expected to reflect on its second-quarter grocery sales results. This, in turn, might have encouraged Prime subscription in the to-be-reported quarter.

The company held Prime Day event in the United States, United Kingdom, UAE, Turkey, Spain, Singapore, Saudi Arabia, Portugal, the Netherlands, Japan, Luxembourg, Italy, France, Germany, Australia, Austria, Belgium, Brazil and China in the concerned quarter.

It witnessed robust Prime Day sales along with solid momentum among the small and medium sellers. This upside is expected to get reflected in the second-quarter top-line results.

The company’s strengthening footprint in countries like India, Canada and Australia among others are expected to have bolstered its efforts toward expanding in the global retail market. The company’s aggressive strategies, and expanding seller and buyer base are likely to have remained positives.

Amazon is also constantly witnessing growth in its online shopping orders amid the pandemic, which is likely to reflect on the second-quarter results.

This apart, the company’s strong fashion retail efforts might have continued to aid its performance in the quarter under review.

All these endeavors are likely to have strengthened Amazon’s competitive edge against retailers like Walmart WMT, Target TGT and Kroger KR in the to-be-reported quarter.

Coming to streaming services, a solid momentum across Prime Video is expected to have remained a major tailwind in the soon-to-be-reported quarter. Expanding original content, regional content and the overall content portfolio on Prime Video are expected to have driven the Prime subscription in the to-be-reported quarter.

Gains from the growing momentum across Amazon Music are expected to show on the company’s second-quarter results. The e-commerce giant made its high-quality streaming service Amazon Music HD available to all eligible Amazon Music Unlimited subscribers who need not pay any extra cost for availing the service.

The company rolled out an on-demand listening experience called DJ Mode on Amazon Music. All these are expected to have driven momentum across Amazon Music in the quarter-to-reported.

AWS Portfolio Momentum to Consider

The company’s expanding Amazon Web Services (AWS) portfolio is expected to benefit the second-quarter results.

In the said period, AWS announced the general availability of its fully managed container application service AWS App Runner.

The company made its fully managed operations service Amazon DevOps Guru generally accessible. The service detects operational issues automatically and suggests specific actions for the same.

The announcement regarding the general availability of analytics service Amazon FinSpace remains noteworthy. The service simplifies the steps needed to find, prepare and analyze financial data, thereby helping FSI organizations in addressing the time challenge involved in these steps.

AWS made Amazon Nimble Studio generally available. The service expedites the setting up of a content production studio from the duration of some weeks to a few hours.

The company announced the general availability of AQUA for Amazon Redshift, which is a distributed and hardware-accelerated cache for Amazon Redshift. AWS made its abnormality detection solution Amazon Lookout for Equipment generally available.

Amazon Location Service, which makes the addition of location functionality seamless, was made generally available.

AWS made the new capability of Amazon Elastic Container Service (ECS), Amazon ECS Anywhere, and its application delivery service AWS Proton generally available.

We expect all these initiatives to have helped Amazon win customers. This, in turn, is expected to have boosted AWS’ second-quarter revenues.

Smart Devices Portfolio Strength

Amazon’s expanding portfolio of Echo smart speakers is expected to have contributed well to its second-quarter performance. Notably, the company launched Echo Show devices, namely the new Echo Show 8, Echo Show 5 and the first Echo Show 5 Kids during the second quarter.

Apart from this, the e-commerce giant unveiled the new Fire Kids Pro tablet for kids belonging to the age group of 6-12 years and the next-generation Fire HD 10 Kids tablet for kids in the age group of 3-7 years.

The company also rolled out the next-generation Echo Buds with advanced features in the second quarter.

Strengthening Alexa features are too likely to have aided Amazon in delivering a better user experience.

All these endeavors are expected to show on the company’s upcoming results.

Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
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The Kroger Co. (KR): Free Stock Analysis Report
 
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