• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Amazon's Q1 Results Explained In Six Simple Charts

Tyler Durden's picture




 

Moments ago Amazon reported its latest numbers which, as one would expect, emphasize the future and the profit potential one, two or more decades in the future, instead of highlighting the present and certainly the recent past. Because, neither the present nor the recent past are pretty.

In a nutshell: in Q1 Amazon posted a tiny beat on revenues, with Q1 sales printing at $19.7 billion compared to $19.4 billion estimated, however this is as good as it went. The problem as everyone knows for Amazon, are its margins. And in Q1 operating margins tumbled once again, this time to 0.7% (see chart below) which in turn resulted in operating income of only $146 million, well below the $200 million expected. And the cherry on top: AMZN guided to a Q2 operating loss between $455 million and $55 million, compared to the estimated profit of $210 million. Oh well, any decade now.

Here are Amazon's result in 6 simple charts.

First, total employees and worldwide revenue growth:

 

Quarterly operating and net income by quarter:

 

And Amazon LTM operating margin. It just printed at its all time joint low:

 

Quarterly operating margin:

 

A historical snapshot of just the first quarter across the past five years:

 

And the punchline: Q1 margin. No commentary necessary

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Thu, 04/24/2014 - 16:44 | 4692412 Joseph LaVorgna...
Joseph LaVorgna's Meteorologist's picture

The stock will up 10% tomorrow because Bezos rubbed his bald skull counter clockwise which is good luck. 

Thu, 04/24/2014 - 16:49 | 4692442 NotApplicable
NotApplicable's picture

Well, at least it looks like a controlled "soft-landing" on zero.

Thu, 04/24/2014 - 16:51 | 4692455 EscapeKey
EscapeKey's picture

Valuation - yes, ridiculous.

But it IS impressive that a company generating revenue of $74.5bn/yr STILL grows at above-20% levels.

 

Thu, 04/24/2014 - 17:24 | 4692582 Hero Protagonist
Hero Protagonist's picture

That reminds me of the company that was loosing money on every sale, but stated that they'd make up the shortfall on increasing volume. :)

Thu, 04/24/2014 - 18:02 | 4692719 James_Cole
James_Cole's picture

That reminds me of the company that was loosing money on every sale, but stated that they'd make up the shortfall on increasing volume. 

The Bezos school of economics?

Thu, 04/24/2014 - 21:13 | 4693443 Nassim
Nassim's picture

"loosing" is not the same thing as "losing"

Don't they teach you Americans how to spell?

Thu, 04/24/2014 - 17:33 | 4692629 obejoyful
obejoyful's picture

I could be a 200 billion company and grow 100% if I sold gold now at $1000.  After the start up phase, revenue means nothing compared to profits.   This generation has gone insane.

 

Thu, 04/24/2014 - 17:56 | 4692699 goBackToSleep
goBackToSleep's picture

yes, its the new wally world..... Just keep my tax free tp coming bitchez!

Thu, 04/24/2014 - 18:34 | 4692840 trader1
trader1's picture

commoditization of EVERYTHING.

before you know it, we may even commoditize the human experience.  

 

Thu, 04/24/2014 - 18:41 | 4692867 Hugh_Jorgan
Hugh_Jorgan's picture

Hmm, now I understand why Amazon Prime is going up from $79/yr to $99/yr.

Thu, 04/24/2014 - 16:53 | 4692458 Rainman
Rainman's picture

they'll make it up on volume ... of employees

Thu, 04/24/2014 - 16:59 | 4692483 Divided States ...
Divided States of America's picture

You mean drones

Thu, 04/24/2014 - 17:04 | 4692505 Xibalba
Thu, 04/24/2014 - 17:16 | 4692553 kchrisc
kchrisc's picture

Funny. as I was reading the article I was wondering how the propaganda media was going to spin it, You provided the answer.

Unicorns everywhere one looks.

Thu, 04/24/2014 - 17:25 | 4692591 max2205
max2205's picture

When the fuck do they start selling sex robots...yum

LOL

Thu, 04/24/2014 - 17:23 | 4692581 ebworthen
ebworthen's picture

And selling fudge.

Really good chocolate fudge, with nuts.

Thu, 04/24/2014 - 16:45 | 4692413 alien-IQ
alien-IQ's picture

must be flying on these "stellar" numbers...

Thu, 04/24/2014 - 16:45 | 4692418 JPM Hater001
JPM Hater001's picture

<---Winning on thin ice...

<---Winning on wheat thins...

Thu, 04/24/2014 - 16:46 | 4692424 NOTaREALmerican
NOTaREALmerican's picture

Looks like a buy to me,  as long as we apply the first law of bullshit:

X (amazon stocks in the this case) + bullshit  = $ ^ bullshit.

 

Thu, 04/24/2014 - 16:46 | 4692427 slaughterer
slaughterer's picture

Non-GAAP.  For the mother fucking win.  

Thu, 04/24/2014 - 16:50 | 4692451 NotApplicable
NotApplicable's picture

Given the amount of usage it gets, at some point they're gonna have to drop the "non" part, as it seems to be more and more accepted, every day.

Thu, 04/24/2014 - 17:04 | 4692509 ParkAveFlasher
ParkAveFlasher's picture

Yes, let's dilute accountability even more.  It's only words.

Thu, 04/24/2014 - 17:27 | 4692599 PT
PT's picture

GANAP?

Generally Accepted Non-Accounting Practices?

Thu, 04/24/2014 - 19:58 | 4693180 zyby
zyby's picture

GNAAP - Generally Non-Accepted Accounting Practices

fixed that for ya.

Thu, 04/24/2014 - 17:30 | 4692617 PT
PT's picture

GAMIUAYGAP?

Generally Accepted Make It Up As You Go Along Practices.

GALP?

Generally Accepted Lying Practices?

Thu, 04/24/2014 - 17:32 | 4692626 PT
PT's picture

FAAP?  CAAP?

Fraudster Accepted ...

Conman Accepted ...

 

Thu, 04/24/2014 - 17:51 | 4692683 holmes
holmes's picture

BMAAP

Bernie Madoff Approved Accounting Principles

Thu, 04/24/2014 - 16:46 | 4692428 Dr. Richard Head
Dr. Richard Head's picture

Soooooo........this is a sign of the recovery?

Thu, 04/24/2014 - 16:48 | 4692431 ParkAveFlasher
ParkAveFlasher's picture

I just tried to return a physical book purchased on Amazon.  They said, no need to return, and here's your refund.  What a country!  I love this company.  I do have Amazon Prime.  It's like an epic stream of free Siht for $99/year!

Thu, 04/24/2014 - 16:53 | 4692460 CrashisOptimistic
CrashisOptimistic's picture

Bought a keyboard for a Nexus 7.  They sent one for Nexus 11 or 13 or something.  Didn't fit the case.

I said I need to return and here's what you should have sent.  They sent the correct thing and said trash the old one.  No need to return.

I gave it to a neighborhood kid.  He Ebayed it.

Thu, 04/24/2014 - 17:06 | 4692514 ParkAveFlasher
ParkAveFlasher's picture

He rehypothecated it.

Thu, 04/24/2014 - 17:32 | 4692624 pods
pods's picture

And it is now supporting about $4 billion in Chinese construction loans.

pods

Thu, 04/24/2014 - 17:25 | 4692590 ebworthen
ebworthen's picture

Wow, talk about a slim profit margin!

Thu, 04/24/2014 - 21:44 | 4693517 rosiescenario
rosiescenario's picture

.....it was due to the weather....

Thu, 04/24/2014 - 23:27 | 4693816 StychoKiller
StychoKiller's picture

The shipping costs were more than the product was worth.

Thu, 04/24/2014 - 16:53 | 4692462 EscapeKey
EscapeKey's picture

Agreed. I love Amazon. But I wouldn't invest in them.

 

Thu, 04/24/2014 - 17:04 | 4692507 eucalyptus
eucalyptus's picture

I invested right before the crash @ 90. Got spooked and dumped at 60 and never went back in. :(

Thu, 04/24/2014 - 17:05 | 4692511 ParkAveFlasher
ParkAveFlasher's picture

Time for you to get Amazon Prime, and seek your revenge.

Thu, 04/24/2014 - 17:25 | 4692589 1stepcloser
1stepcloser's picture

Yep like I would bang ur avatar, but wouldn't marry it

Thu, 04/24/2014 - 17:59 | 4692707 williambanzai7
williambanzai7's picture

It is easy to fall into the trap of loving Amazon, as I did as well in the very beginning. Wow, everything is cheap!

However, when you consider the broader impact it has has had, not only on the creative industry, but the entire ecosystem of distribution, record shops, local booksellers, etc, a loss has been suffered by society. It may have been technologically inevitable, but Amazon certainly expedited and exacerbated the overall demise.

Once thriving small businesses that many people now miss, were replaced by a giant Wall Street financed behemoth. Most artists, writers and other creative types whose minuscule margins are not subsidized by hedge funds hate it.

TBTF

Thu, 04/24/2014 - 22:26 | 4693648 AdvancingTime
AdvancingTime's picture

It is hard to see why Amazon has any fans when you consider how they abuse and exploit the brick and mortar stores that line streets throughout America. These are the stores that employ our family members, support little league teams in the community, and add value to our lives. These stores build or lease space, buy supplies from the other local businesses, and pay both sales and real-estate taxes. While Amazon sends out the signal that their customers are smart, forward thinking, and upscale they exploit America and have an evil side, this is a side we should and must recognize.

Thu, 04/24/2014 - 23:29 | 4693820 StychoKiller
StychoKiller's picture

http://www.deviantart.com/

Go then, and purchase sumthin'...

Fri, 04/25/2014 - 08:22 | 4694589 Pee Wee
Pee Wee's picture

I forget, was the loss the overpriced music from shit musicians or the retail model from top to bottom?

Fri, 04/25/2014 - 12:17 | 4695634 PT
PT's picture

The stupid sheeples will willingly cut their own throats in pursuit of a "bargain".  I try to explain it to them and they simply do not care.

Funny thing.  Land premiums should be collapsing.  Nope.  Not happening.  Gee, I wonder why?

Over here, our govt/media propaganda machine blames the collapse of retailing on a 10% GST that doesn't apply to online purchases.  Well, that explains a 10% discount.  What about the other 50% ?  Good thing the sheeps are crap at maths.

Thu, 04/24/2014 - 16:53 | 4692465 NotApplicable
NotApplicable's picture

Hmm... this is good intel.

Thu, 04/24/2014 - 17:09 | 4692522 ParkAveFlasher
ParkAveFlasher's picture

Right? 

Now, what happens if you get no returns?  100% sell through, that's what.  And we all know that sell-through is what really counts to probey investors and audited financial statements and sales analyses.  So, just keep it, on us, and here's your money back. 

FREE SIHT ARMY STRIKES AGAIN!

Thu, 04/24/2014 - 17:04 | 4692503 eucalyptus
eucalyptus's picture

Yglesias was right - It's a charity run by investors for the benefit of consumers. I bought an xbox360 from them 2 years ago. They shipped me 2 units by charged me for 1 (300 a piece - only wanted 1). I called in to tell them I wanted to ship one back because they sent me too many. 

They paid for the shipping for me to mail it back - and then gave me a 300 credit for it, effectively giving me an xbox360 for free.

I also have an amazon prime student membership at the stupidly low student rate because all you need ia  .edu address, which my alumni one works. 

Ridiculous company. 

That said, it is damning that FB is worth more (or about the same) by mkt cap as amazon. One is completely useless - amazon provides much more consumer value. 

Thu, 04/24/2014 - 16:49 | 4692440 TheGreenManalishi
TheGreenManalishi's picture

?

Thu, 04/24/2014 - 16:51 | 4692450 SmilinJoeFizzion
SmilinJoeFizzion's picture

Starbucks just hit their estimates too, "EX-ITEMS"

 

I'd be looking pretty good on paper too EX ITEMS

 

You scratch the mortgage pmt, the food cost, fuel costs, car pmts off the books and I look pretty good too

 

This is such BULLSHIT

Thu, 04/24/2014 - 21:49 | 4693532 rosiescenario
rosiescenario's picture

...those would be the non-recurring, but quarterly, charges?

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