Amazon (NASDAQ: AMZN) Q2 2020 Earnings – AWS and Online Sales Continue to Serve as Bulwarks


Amazon (NASDAQ:AMZN), the e-commerce titan, has been at the forefront of the astonishing stock market rally following the lows hit back in March. Today, the company has come under a fresh spotlight as it announces its earnings for the second quarter of 2020.

Amazon revealed the much-anticipated numbers just moments ago, painting a dramatically rosy picture.

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Amazon Q2 2020 Scorecard

For the three months that ended on the 30th of June 2020, Amazon reported $88.9 billion in revenue, registering an increase of 40 percent relative to the comparable quarter last year. Bear in mind that the company had guided to a quarterly revenue of between $75 billion and $81 billion when it reported its earnings for Q1 2020.

(All figures are in billions of dollars)

As far as Amazon’s business segments are concerned, online stores and 3rd party sellers registered the biggest jump in growth.

(All actual figures are in billions of dollars; all growth figures are percentage changes relative to the comparable quarter last year)

Amazon earned $31.9 billion in Free Cash Flow on a trailing 12-month basis

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(All figures are in billions of dollars and represent the 12-month period preceding the relevant quarterly earnings)

Finally, Amazon reported an EPS of $10.3, exceeding consensus expectations by a whopping $8.68. This corresponds to a net income of $5.2 billion.

(All figures are in dollars and represent EPS calculated on an adjusted diluted basis)

As far as the guidance is concerned, Amazon expects to earn between $87 billion and $93 billion in revenue during Q3 2020, translating to an annual growth that ranges between 24 percent and 33 percent relative to Q3 2019. Moreover, the e-commerce giant expects its operating income to range between $2 billion and $5 billion for the pertinent quarter.

Amazon’s stock has reacted positively to the earnings release, posting a gain of over 6 percent in the after-hours trading. Bear in mind that the stock registered its all-time high closing price of $3,200 on the 10th of July. Year to date, Amazon shares are now up 60.8 percent based on Thursday's closing price.

It should be noted that Amazon's AWS recorded a slower growth as compared to consensus expectations. Nonetheless, the company continues to benefit from the ongoing coronavirus (COVID-19) pandemic paradigm, witnessing sustained strength in e-commerce and AWS segments as online sales soar and cloud adoption accelerates. Bear in mind that the company revealed in its earnings for Q1 2020 that it would incur around $4 billion in costs related to the coronavirus (COVID-19) pandemic during the pertinent quarter, thereby, giving rise to modest headwinds. Given the earnings disclosure and Q3 guidance today, it is reasonable to conclude that Amazon’s upcoming quarter will continue to exhibit strength.

As a refresher, Amazon received a street-high stock price target of $3,800 on the 20th of July from two Wall Street heavyweights – Goldman Sachs (NYSE:GS) and Jeffries. The matching nature of these prognostications has only served to enhance the probability of Amazon attaining the designated lofty stock price target, thereby, boosting investor euphoria. Both Goldman Sachs and Jeffries cited optimism around Amazon’s Q2 2020 earnings as a major contributing factor for the upgrade.