E-commerce giant Amazon.com (NASDAQ:AMZN) will be reporting its earnings on Thursday, October 24. The earnings report comes at an interesting time for the company whose stock has been sluggish this year. In the past few years, Amazon stock had performed well but currently, it is 10% off its all-time high.
Amazon has grown to be a huge multinational company with several business segments. Here are some of the important aspects for investors to watch ahead of the earnings report.
Amazon Earnings: Growth of the Amazon Web Services segment
AWS is a huge segment for the company. Last year it generated around two-thirds of the company’s operating income. It is a valuable segment for the company despite making about 13% of the revenue. The cyclical revenue business strategy ensures that is is the most profitable and valuable segment to Amazon.
In the last quarter, the segment grew by 37%, which is substantial. Amazon indicated that it had invested greatly in the AWS segment. This came with the addition of more staff to the marketing team. Although the investments in AWS impacted the margins, in the long-term, it could establish the company even better.
Amazon Earnings: Growth of the retail segment in North America
The other segment to watch is the North America retail segment that has been accelerating in recent times. Thanks to the one-day shipping initiative the company has managed to grow the retail business in North America. Equally the addition of items of even $1 to the prime free shipping service has helped a lot. The company reported significant growth in the segment in the previous quarter and investors should be keen on how it performs this quarter.
Amazon Earnings: Issues to do with third party products
Despite the positives, there have been issues surrounding third party products offered on the company’s platform. In August The Wall Street Journal reported that there was an increase in counterfeit and faulty third party products offered through the Amazon platform. It will be interesting for investors to watch in the report affected negatively the growth of third party sales.