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What to Look for in Amazon’s Earnings Report

Amazon Go brick-and-mortar location

Amazon (NASDAQ:AMZN) is personally one of my favorite companies.  Just about everyone and their mother know about the company, as well as use their services.  With their major success in disrupting the retail market, I’m confident the company can disrupt and prove successful in many other markets.  Amazon’s recent moves into the cloud web services, video streaming and production, consumer groceries, and health care sectors make it even more attractive leading into 2019.

Today after the market closes, Amazon will release their Q3 results for 2018.  Besides the basics like earning per share and operating margin, there are some fine print variables you should investigate:

Revenue from Subscription Services

In recent years, Amazon has created a subscription-based platform that gives users access to quick and free shipping as well as other offers such as movie and TV streaming.  Amazon Prime has quickly established itself as one of the most successful subscription-based products to hit the market.  Currently Amazon Prime has over 100 million users, which beats other services such as Spotify, Hulu, and the New York Times.  In recent quarters, the company has shown consistent growth in their net sales from subscription services rising from $1.9 billion in Q1 of 2017, to $3.4 billion in Q2 of this year.

Additionally, all Amazon Prime members have free access to Amazon Video which has shown major success over the last year when they received 22 Emmy nominations.  Prime Customers are also eligible for in-store discounts at Amazon’s newly acquired grocery store chain, Whole Foods.

Watch the company’s earnings report after the market closes and keep a close eye on net sales reported from subscription services to see if there is some growth left in the Amazon Prime market.

Amazon Web Services

One of the most revolutionary bits of technology we’ve seen in the last few years would defiantly be the Cloud and cloud storage.  The cloud allows users to save their data on separate, anonymous servers which protect the users against the loss of their data.  This has transformed from regular people saving pictures and word documents to large corporations using it for all their day-to-day needs.

Amazon managed to enter the cloud solution game rather early and have established themselves as one of the most prominent web service providers.  Amazon’s AWS boasts well over 1 million active enterprise customers from 190 countries around the world.

In their earnings report later today, take a look at anything that goes over Amazon’s AWS.  For the past 6 quarters, the AWS segment has grown over 40% year-over-year.  A good sign would be a continuation of this growth, as other companies like Microsoft are beginning to get more aggressive on their cloud offerings.

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