Amazon FY - Cloud prints cash


I remember a time when Amazon used to stumble on to a profit every once in a while. These days, with Amazon Web Services (AWS) printing cash, profits are becoming the norm. Amazon reported 4th quarter and full year numbers last week Thursday which pleased the market and smashed expectations.


Amazon 3Q numbers - surge in profits


Amazon's 3Q Numbers In his new book, The Four, Prof. Scott Galloway says that Amazon appeals to our consumptive gut, taking in stuff we need to survive and sending it to our bodies. The notion of "more" is hardwired into us. Even when things are too much, there is still a desire for more. When it comes to consumption; throughout history the penalty for too little has been starvation and malnutrition which is a terrible death. The penalty for too much is lethargy, gluttony, diabetes but has a pretty long lag. Open your cupboards, open your closets you have ten to a hundred times more than you really need. It's really crazy when you think about how much stuff we have, but its so hardwired in our DNA! The ultimate business strategy is more for less. It has been the business strategy of China, Walmart, and now Amazon.


Amazon is coming for you


A few days ago, I was watching a Bloomberg interview of one of my favourite Professor Entrepreneurs, Prof. Scott Galloway. They asked him about his new book The Four, Or How To Build A Trillion Dollar Company and his thoughts on Amazon. Below is what he had to say about the company, and here at Vestact we kinda liked what he had to say because Amazon is one of our biggest holding for our offshore portfolios.


Amazon 2Q - Revenue up, profit down


Amazon is an equally exciting and amazing business, every little bit as intriguing as the new technology titans of our time. What Jeff Bezos has been able to build over a period of two and bit decades is a testament to his vision and belief that anything is possible. In fact, the anything store from A-Z is what Bezos wants Amazon to be. Whether you are a part time user of the service to buy infrequently, or whether you are a Prime user who likes to order everything at all points online, and live for the convenience, then you pay more and Amazon is happy to deliver. I guess Bezos and Amazon work with the philosophy that if the customer adopts the product/service, then we will give it everything, if not, cut it and can it.


Amazon 1Q - more impressive growth


Amazing Amazon just continues to thrive. They reported first quarter 2017 results last night which the market took kindly to. The stock is up 4% after the close, touching on $954 a share! Before we go through the many highlights, let's look at the numbers.


Amazon 4Q & FY numbers - strong growth from AWS


Amazon reported numbers after hours, this was for the "holiday" quarter - Fourth Quarter Sales up 22% to $43.7 Billion. The sales number fell short of expectations and guidance, as much as 1 billion Dollars or around 2 and a bit percent relative to what the market expected. The company reported profits ahead of consensus, that matters little when you are owning the stock for the sales growth. There is a major contributor over the last few years, that being AWS (Amazon Web ServiceS). In case you needed a refresher - Amazon AWS update.


No queues, no checkout tills


When you think about Amazon, you think about a company that is completely online, you think about a company that has no store presence and is at the cutting edge of retail with their massive fulfilment centres. That is how I think of Amazon. Well, wait. That is about to all change. Except, not in the way that you may have thought. There may still involve very few people in these stores. The technology being touted is something called "Just Walk Out". Here is an introductory video that Byron sent to the WhatsApp group, introducing Amazon Go, with the pay off line of "No lines. No Checkout. (No, Seriously) - The world's most advanced shopping technology. You see that the clip, a day old, has had 1.5 million views already and counting at a rapid rate.


Amazon AWS update


Amazon have just finished what is called the AWS Re:INVENT conference. I don't blame you for not knowing what that is, we will try our best to explain. It is 32 thousand folks crammed into a giant auditorium (this time in Vegas) with the web service business chief (Andy Jassy) opening with examples of how the services are used, and then away we go. Get togethers for all the people there, plus another 50 odd thousand watching online, in part enabled through the backbone of Amazon Web Services (which is what AWS stands for). Don't feel confused, this is all rather new for all of us, this business after all is only ten years old, and is half the age of the parent company, Amazon.


Amazon 2Q blows estimates away


Amazon reported numbers after-hours yesterday. This is an incredible business too. The founder has pretty much tried everything, you may recall the infographic from the Visual Capitalist - How Jeff Bezos Built his Amazon Empire. There are tons of things that the fellow has started and failed at, it is better to have tried and failed rather than to have never tried at all, as they say in the classics. Straight into the new age retailer's results - Announces Second Quarter Sales up 31% to $30.4 Billion.


Amazon 1Q numbers - AWS showing strong growth


As we chatted about last week, released their 1Q 2016 numbers and they smashed expectations pushing the stock back to record highs. Here are the numbers, Revenue up 28% to $29.1 billion, operating income up 331% to $1.1 billion and Net Income is $513 million from a loss of $57 million. The net income number is not of huge importance, as Amazon is spending most of the cash that comes through their front door on infrastructure development.


Amazon 4Q and full year numbers


Jeff Bezos announced another stellar year of growth for on Thursday. As Sasha wrote yesterday, the market was expecting more. Headlines on Friday morning were along the lines of "Amazon disappoints". I think sometimes people get too focused on the expectations and lose sight of the bigger picture. Full year revenues grew by 20% to $107 billion, putting them into an exclusive club of companies. To put their revenue growth into perspective, the revenue growth of $18 billion last year was more than the total revenue of Visa for 2015.


Record numbers, better expected


In other corporate related news, Announces Third Quarter Sales up 23% to $25.4 Billion, which included in that is a rare profit, 17 whole cents per share for the quarter. Mr. Market had expected the fast growing company, that invests heavily in their business to not report such a profit, at best a really modest one. And whilst it is pretty insignificant in the short term (406 million Dollars operating income on revenues of 25.4 billion Dollars), it is a shift in the right direction. Comfortably above consensus and their own guidance.


Amazon Flex


This is pretty incredible. Want a part time job, want to earn 18-25 Dollars an hour? Or until the drones replace you, someone quipped on Twitter, then become a delivery person for Amazon -> Amazon Flex. What are you going to deliver via your own transport? Yes, your own transport. It turns out Amazon Prime Now packages, for those who really can't wait. You can work 12 hours a day, 7 day a week, earnings 2100 Dollars a week, or 109,200 Dollars a year, provided you work each and every day for 12 hours a day, presuming you changed that to 5 days a week, the annual salary would still be an acceptable 78,000 Dollars a year.


Amazon 2Q numbers


Last night after the market closed Amazon released their second quarter results. The stock in after hours trade is up 17% which gives Amazon a bigger market cap than Walmart! Walmart has revenues of $486 billion compared to Amazon with revenues of $89 billion. South Africa has a GDP of around $350 billion. This article gives a good comparison of the two companies - Amazon is now bigger than Walmart.


Amazon moves closer to drones


Amazon has been granted the ability to fly their drones, or more specifically as per the FAA website: Amazon Gets Experimental Airworthiness Certificate. It is pretty simple, as per the release: "all flight operations must be conducted at 400 feet or below during daylight hours in visual meteorological conditions. The UAS must always remain within visual line-of-sight of the pilot and observer. The pilot actually flying the aircraft must have at least a private pilot's certificate and current medical certification." That sounds pretty dumb. I would love to hear a pilots opinion on the matter.


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