4/30/2021 Amazon (AMZN) earnings Q1 2021

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TECH

Amazon’s sales surge 44% as it smashes earnings

expectations
P U B L I S H E D T H U, A P R 2 9 2 0 2 1 • 3 : 3 8 P M E DT U P DAT E D T H U, A P R 2 9 2 0 2 1 • 6 : 5 3 P M E DT

Annie Palmer
@ A N N I E R PA L M E R

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KEY POINTS
Amazon on Thursday released first-quarter results that trounced analysts’
expectations.

The company confirmed that this year’s Prime Day will take place in June,
which will likely help year-over-year comparisons for revenue in the second
quarter.

In this article

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4/30/2021 Amazon (AMZN) earnings Q1 2021

Amazon another big beat for Big Tech

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Amazon shares climbed more than 3% in extended trading Thursday after the
company released its first-quarter earnings, beating Wall Street’s expectations for
earnings and revenue.

Here’s how the e-commerce giant fared, relative to analyst estimates compiled by
Refinitiv:

• Earnings: $15.79 per share vs. $9.54 per share expected

• Revenue: $108.52 billion vs. $104.47 billion expected

Few companies have benefited from the pandemic-fueled surge of online shopping
as much as Amazon. Its first-quarter results showed the company’s business
continues to be buoyed by the pandemic, with sales soaring 44% year over year to
$108.5 billion.

Amazon’s guidance for the second quarter implies that it expects the momentum to
continue, which should help allay investor fears that business could slow in a post-
pandemic environment. The company expects to post revenue between $110 billion
and $116 billion, surpassing Wall Street’s projection of $108.6 billion.

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4/30/2021 Amazon (AMZN) earnings Q1 2021

Crucially, Amazon confirmed in its guidance that this year’s Prime Day will take
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place in June, which will likely help year-over-year comparisons for revenue in the
second quarter. Typically, Amazon’s annual, two-day discount bonanza takes place
in July, but the company postponed the event to October last year amid pandemic-
related uncertainty.

When asked about the Prime Day timing, CFO Brian Olsavsky said on a call with
investors: “In many areas, July is vacation month, so it might be better for customers,
sellers and vendors to experiment with a different time period. We believe that it
might be better timing later in [the second quarter], so that’s what we’re testing this
year.”

Outside of its core retail segment, Amazon’s cloud-computing and advertising

businesses continue to boom. Amazon Web Services saw net sales of $13.5 billion
during the quarter, up 32% year over year. Amazon doesn’t disclose advertising
sales, but it’s included in the company’s “Other” category, which saw its revenue
grow 77% year over year to $6.9 billion.

Amazon CEO Jeff Bezos also gave a rare glimpse into how the company’s streaming
service, Prime Video, has fared during the pandemic, as stuck-at-home consumers
have relied on online entertainment. Prime Video is a key offering of the company’s
Prime subscription service. “As Prime Video turns 10, over 175 million Prime
members have streamed shows and movies in the past year, and streaming hours are
up more than 70% year over year,” Bezos said in the earnings release.

A Prime subscription costs $119 a year and includes a range of other benefits, such
as free, two-day shipping. Bezos disclosed earlier this month that the company now
has 200 million Prime subscribers, 50 million more than it had at the start of 2020.

Physical stores revenue, which includes Whole Foods Market and other brick-and-
mortar offerings such as Amazon Books, continued to fall. Sales slumped 16% to
$3.9 billion. The category excludes online delivery, Olsavsky said.

During the quarter, Amazon’s sales grew faster internationally than they did in North
America. International revenue surged 60% year over year, more than any other
segment, while North America revenue climbed 40%.

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4/30/2021 Amazon (AMZN) earnings Q1 2021

As expected, Amazon will incur fewer costs this year related to coronavirus safety
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measures. Operating income is forecast to be between $4.5 billion and $8 billion in
the second quarter, assuming $1.5 billion of costs related to Covid-19. That’s in line
with what Amazon executives predicted last quarter.

Amazon said Wednesday it would spend more than $1 billion on raising wages for
over half a million of its U.S. operations workers. On a call with reporters, Olsavsky
said it decided to move up the pay increase from the fall to this spring as volumes
remain just as strong as they were at the beginning of the pandemic.

Olsavsky declined to comment on Amazon’s CEO transition plans, which will come
into play once Bezos steps down in the third quarter. Bezos will turn the helm over to
AWS CEO Andy Jassy and assume the role of executive chairman of Amazon’s board.

Correction: Amazon’s revenue grew 44% year-over-year to $108.5 billion. A previous

version of the story misstated the figure.

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