Amazon share price surges 13% after hours on revenue beat

Happy couple doing online shopping.Happy couple doing online shopping.

The share price of online retailing juggernaut Amazon.com, Inc (NASDAQ: AMZN) has surged more than 13% in post-market trading in the US.

At the time of writing, Amazon shares are resting at $122.28 apiece, having closed the US session higher in extended trading after the company released its Q2 FY22 earnings.

Amazon share price roars post-market after earnings

The key standout for Amazon for the period was its $121 billion in quarterly revenue. In what appears to have been good news for the Amazon share price, this beat analysts’ expectations by more than $2.04 billion.

Advertising revenue was particularly strong this quarter, growing 18% year on year to around $8.8 billion.

Meanwhile, operating cash flow decreased 40% to $35.6 billion, whereas free cash flow decreased to an outflow of $23.5 billion.

Notably, Prime members purchased more than 300 million items on Prime Day and saved more than $1.7 billion — more than any other Prime Day event.

Moreover, Amazon style was on show this quarter as it launched Virtual Try-On for Shoes, “where shoppers can virtually try on thousands of sneaker styles”.

The company also reaffirmed that customers in California and Texas will be among the first to receive Prime Air drone deliveries.

“Customers will have the option to receive free and fast drone delivery on thousands of everyday items,” Amazon stated.

These results actually overshadowed a net loss of $2 billion for the quarter. The result gives a loss on earnings per share (EPS) of 20 cents, below analyst estimates of a positive 12 cents EPS.

However, the bottom-line result appeared to be skewed somewhat, as it reflects an approximate $4 billion charge related to Amazon’s equity stake in electric automaker, Rivian Automotive.

Management commentary

Speaking on the results that have boosted the Amazon share price, CEO Andy Jassy said:

Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network.

We’re also seeing revenue accelerate as we continue to make Prime even better for members, both investing in faster shipping speeds, and adding unique benefits such as free delivery from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting September 15, and releasing the highly anticipated series The Lord of the Rings: The Rings of Power on September 2.

What’s next for Amazon?

The strong result saw management reinstate third-quarter guidance of net sales between $125 billion and $130 billion, calling for growth of 13-17%.

With this result, it also expects some unfavourable impact from foreign exchange rates. Meanwhile, Amazon also forecasts operating income of $3.5 billion at the upper end.

The Amazon share price is down 28% this year to date, and 32% in the past 12 months.

The post Amazon share price surges 13% after hours on revenue beat appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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