SAN FRANCISCO (Reuters) - Amazon.com Inc's (AMZN.O) first-quarter revenue jumped 22 percent to $16.1 billion, propelled by growing sales of digital content, cloud-computing services and gains in retail. But it forecast weak sales this quarter, raising concerns about a slowing international business.
"This quarter is a bit of a 'tweener' so to speak: the company gave you a favorable margin, which is evident in both gross-margin performance and the upside in earnings, and then sales while not spectacular were good.
"Increase in third-party unit sales has been funding their gross margins.
"When I read the guidance for Q2 for operating margins, it suggests to me they're telegraphing that the company is going to continue a heightened rate of investment.
"Looking at the international performance, I think the message there is North America was better than expected but international was softer. The questions is: is this a reflection of macro trends in Europe, or is there something else going on there?"
"The fundamentals of the business improved significantly. So you saw a material improvement in gross margins, as well as a significant upside to estimates for their pro-forma operating margins. The trends are moving in the right direction fundamentally for the company.
"The high end of the guidance for revenue was above the Street. The pro-forma operating margins were slightly below the Street on the high end but they typically guide conservatively on that. Net, net it was a good print.
"The margins in international declined and that was a weak post.
"What we're seeing is that Amazon is really getting leverage from shipping costs. AWS is becoming a big part of their mix. They are also benefiting from a greater mix of advertising revenues. We'll continue to see that improve."
"The numbers came in relatively in-line.
"Guidance was maybe slightly disappointing. But when you look at the gross profit for the quarter, it beat expectations. They grew gross profit at 35 percent year-over-year.
"At the end of the day, at least on that basis, they are showing some very good progress. You are seeing benefit from the higher-margin Amazon Web Services business, and also higher-margin third-party marketplace business."
"Gross margin is definitely better than expected. That is something that investors are certainly keen on.
"Guidance was light, both top- and bottom-line. That certainly won't help the stock perform, although they have over the last several quarters exceeded expectations on the operating income side. So for the guidance, people are more concerned about revenue than operating income."
Reporting By Malathi Nayak and Poornima Gupta