Amazon Earnings Preview Q3 2015

Related Ticker: AMZN

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Tech giant Amazon (AMZN) is expected to report its Q3 2015 earnings results tomorrow (Oct 22), after market close. Amazon had an eventful quarter since its previous earnings release that included announcements of new AWS products/services, the launch of an Etsy-like platform, massive discounts on prime day, new content partnership agreements, hiring part-time delivery drivers, and more.

Amazon reported excellent Q2 2015 results with an EPS $0.33 above consensus and revenues of $790M above consensus, driven largely by an impressive 81% year-over-year growth in AWS revenues. AWS’s operating income hit a new peak of $391 million in Q2 2015, which is a staggering 508% year-over-year growth and 47% quarter-over-quarter growth. After Amazon had reported such impressive results, the company also hiked guidance above analysts’ expectations, and the company’s stock followed with an 18% surge right after the announcement. Analysts’ expectedly raised their price targets to an average of $642, which reflects a 12.5% upside from the current price, and increased revenue expectations to $24.9B for Q3 2015.

Amazon launched key initiatives to drive AWS growth

In light of the phenomenal results AWS reported in the previous quarter, Amazon announced some new initiatives in its recent re:Invent conference aimed at accelerating AWS growth. The company launched a big data analytics and visualization tool, QuickSight, that is targeted to compete with similar solutions from Tableau Software (DATA) and Qlik Technologies (QLIK). These two companies are currently AWS partners with very popular apps that help enterprises to better analyze large amounts of data stored on AWS. The new solution from Amazon is the company’s first attempt to penetrate the steaming big data software market that is currently dominated by pure-play SW providers like Tableau, Qlik, Splunk (SPLK) and big tech names like IBM (IBM), Oracle (ORCL) and HP (HPQ).