Amazon (AMZN) stock is up over 11% today after posting significantly higher revenue and operating cash flow compared to last quarter, and, for revenue, compared to last year. This is despite posting a net income loss.Â
For example, Amazon posted revenue of $121.2 billion, compared to $113.08 billion last year, an increase of 7.18%. In addition, this was 4.11% higher than its prior quarter's sales of $116.44 billion. It was also slightly over the high end of the range that the company had previously forecasted (i.e., between $116b and $121b).
Operating and FCF Performance
In addition, Amazon is one of the only companies that highlights its operating and free cash flow performance. In this regard, it finally turned last quarter's negative $2.79 operating cash flow loss into a positive operating cash flow of almost $9 billion ($8.965b).Â
Granted this quarterly $9 billion operating cash flow was lower than last year's $12.7 billion positive operating cash flow. But it is likely a major reason why the stock is higher today. This is because it means that Amazon can continue to grow its business.
Indeed, Amazon continues to invest heavily in its business, which led to a negative free cash flow (FCF) loss or, as Amazon calls it, an outflow of $6.759 billion for the quarter. That compares to last year's Q2 negative FCF of just $1.573 billion.
Amazon focuses on its trailing 12-month (TTM) performance. In that regard, the trailing operating cash flow was $35.6 billion, vs. $59.3 billion in the prior year's TTM. However, Amazon's $35.6 billion TTM operating cash flow was lower than the Q1 TTM $39.3 billion operating cash flow.Â
The Market Reaction
The 11.5% gain today in AMZN stock to $136.43 by mid-day shows that the market is pleased that there does not seem to be any major effect from a potential recession on Amazon's various divisions.
Moreover, the market was happy to see that Amazon provided very ebullient guidance. The company said that it expects revenue to be between $125.0 billion and $130.0 billion, or to grow between 13% and 17% compared with the third quarter of 2021.
That is a very bullish outlook for the company's sales and could potentially lead to significantly higher operating and free cash flow for Q3 if it occurs.
As a result, the stock is now 11.5% higher at $136.43.
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