Amazon stock slipped in after hours trading Thursday after the e-commerce and cloud-computing giant reported mixed second quarter results.
Earnings beat expectations but revenue came in short of projections, despite a stronger-than-expected contribution from Amazon's cloud computing division. The tech giant's sales forecast was also lower than expected.
Amazon said that it earned an adjusted $1.26 per share on sales of $148 billion for the June-ended quarter. On average, analysts projected the Seattle, Wash.-based company would post adjusted earnings of $1.03 per share on sales of $148.67 billion, according to FactSet.
For the same period a year earlier, Amazon posted adjusted earnings of 65 cents per share on sales of $134.4 billion.
Amazon's closely watched Amazon Web Services business posted sales of $26.3 billion, up 18.7% year over year. Analysts were expecting sales growth of 17.6% for AWS prior to the report.
"We're continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth," said Chief Executive Andy Jassy in a news release.
For the current quarter, Amazon guided for sales of $156.25 billion at the midpoint of its range. Prior to the company posting its results, analysts were projecting Amazon would tally $158.22 billion in sales for the September-ending quarter, according to FactSet.
On the stock market today, Amazon stock is down more than 4% at 175.75 in recent after-hours action.
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Amazon Q2 By The Numbers
Amazon also projected lower operating income for the current quarter than Wall Street expected. The company guided for operating income of $13.25 billion at the midpoint of its range for the September quarter, compared to analyst expectations of $15.3 billion.
Still, the tech giant's second quarter report highlighted the company's progress in its push to boost profitability. Jassy has worked to cut costs during his three years leading the company. Operating income increased 90% year over year to $14.7 billion, the company said. Analysts were projecting operating income of $13.7 billion from Amazon prior to the report.
AWS provided $9.3 billion of that operating income. But the $5.1 billion in operating income from Amazon's North American retail operations — which has been a focus of investors — came in below expectations of $5.4 billion, according to FactSet.
While Amazon Web Services revenue exceeded expectations, other segments of Amazon's business saw sales below expectations in the second quarter. Amazon's advertising business grew sales 20% to $12.8 billion. Analysts were forecasting $13 billion in sales for the division, according to FactSet. Advertising has emerged has Amazon's fastest-growing division and a key source of retail profits.
Meanwhile, the revenue Amazon collects from third-party seller fees grew 12% to $36.2 billion, compared to expectations of $36.5 billion.
Amazon Stock: Technical Ratings
Prior to earnings, Amazon stock fell 1.5% in regular Thursday trading. Shares have gained 21.5% this year and 38% in the past 12 months. Amazon stock climbed to a fresh record high and cleared a $2 trillion market cap late last month before surrendering those gains in July. Shares lost 7% in the month of July, amid an investor rotation away from megacap tech stocks.
Coming into the report, Amazon stock had an IBD Composite Rating of 78 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Amazon's IBD Relative Strength Rating is 82 out of 99. The RS Rating means that Amazon has outperformed 82% of all stocks in IBD's database over the past year.
