Amazon Q2 FY2021 Earnings Preview: AWS Growth & Revenue Insights for 2021

Amazon's Q2 FY2021 earnings report, releasing after market close on July 29, 2021, is highly anticipated by investors eager to assess the company's growth trajectory under new leadership and evolving market conditions.

Key Highlights to Watch

• Projected EPS of $12.47, up from $10.30 in Q2 FY2020.
• Continued healthy year-over-year growth expected in Amazon Web Services (AWS) revenue.
• Overall revenue growth anticipated to slow compared to recent quarters, reflecting a potential tapering of pandemic-driven online shopping demand.

Amazon.com Inc. (AMZN) has experienced remarkable earnings and revenue expansion fueled by the surge in e-commerce and cloud computing amid the COVID-19 pandemic. This quarter marks a significant transition as founder Jeff Bezos stepped down as CEO on July 5, 2021, handing the reins to Andy Jassy, the architect behind Amazon's cloud powerhouse, AWS. Investors are closely monitoring how this leadership change will influence Amazon's future growth and strategic direction.

Analysts forecast a solid increase in both earnings per share and revenue for Q2 FY2021, although growth rates are expected to moderate compared to the exceptional gains seen during the height of the pandemic. AWS remains a focal point due to its high-profit margins and substantial contribution to Amazon's operating income, even though it represents a smaller portion of total revenue.

Despite underperforming relative to the broader market over the past year—with Amazon's stock returning 18.7% versus the S&P 500's 35.9%—recent months have shown signs of narrowing this gap, signaling renewed investor confidence.

Amazon’s Earnings Performance Recap

Following a strong Q1 FY2021 earnings report in April, where EPS soared 215.2% and revenue jumped 43.8% year-over-year, Amazon's stock experienced a temporary decline before stabilizing. The company’s Q4 FY2020 results also surpassed expectations, with EPS growth of 117.7% and revenue growth of 43.6%, during which the CEO transition was announced as a strategic move during a peak of innovation.

For Q2 FY2021, analysts project EPS growth of 21.0% and revenue growth of 29.8%, marking a deceleration but still robust performance. Full-year FY2021 forecasts anticipate EPS increasing by 35.9% and revenue expanding by 27.1%, reflecting a normalization of growth post-pandemic surge.

Source: Visible Alpha

Focus on AWS: The Profit Engine

AWS continues to be Amazon's most profitable segment, offering cloud computing services such as storage, analytics, machine learning, and more to startups, enterprises, government bodies, and academic institutions. While AWS accounted for just 12% of Amazon’s total revenue in FY2020, it generated 59% of operating income, underscoring its critical role in profitability.

Growth in AWS revenue has moderated over recent years, with FY2015 seeing 69.7% growth, slowing to 29.5% in FY2020. Q1 FY2021 saw a slight acceleration to 32.1% growth. AWS holds a commanding 32% share of the $150 billion global cloud market, leading competitors like Microsoft Azure and Google Cloud. For Q2 FY2021, AWS revenue is expected to grow 31.2%, slightly below the previous quarter but still robust, with full-year growth projected at 30.3%.

Investors will also watch Amazon's e-commerce performance closely to gauge how much of the pandemic-driven sales surge will sustain as physical retail locations reopen.

For further insights and updates on Amazon's financial performance, stay tuned to our coverage.

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