Heavyweight tech name Amazon.com (AMZN) is set to report Q2 earnings today after the close today followed by conference call at 5pm ET. 

Current Quarter Expectations: As usual, operating income and revenues estimates are near the upper end of AMZN's prior guidance. 

Q3 Guidance: In the earnings press release, AMZN will issue Q3 guidance for operating income (not EPS) and revenue. Current expectations are for Q3 op income of ~$800 mln on revs +25% to $31.7 bln. AMZN will detail during the call the FX impact incorporated into Q3 guidance (International sales account for more than a third of sales). 

Customer/seller growth metrics (discussed during the conference call)

  • Prime: Typically refrains from giving quarterly specific numbers -- Prime subscriptions increased 51% y/y 2015, up 47% in the US and a higher rate than that internationally. According to the 2015 letter to shareholders, Prime has "tens of millions of members worldwide"—same phrase from its holiday sales update.
  • Active AWS customers: Also usually refrains from giving specific numbers for this metric -- as of Q4 it exceeded 1 mln (vs ~1 mln Q4 prior year).
  • Although not directly comparable to the sales estimates, ChannelAdvisor data over the past three months has indicated strong growth trends. April SSS +12.9%, May SSS +12.3%, June SSS +11.6%.
  • Amazon Web Services - AWS and Cloud: Amazon has only been breaking out this segment for a year now. The company does not provide specific guidance for the unit and estimates are somewhat speculative based on the limited information the company provides.

Based on AMZN options, the current implied volatility is 2x higher than the historical volatility (over the past 30 days). The 1-day event volatility is ~65 points (9%). 

Secondary plays: Retail focus - WMT (reports earnings Aug 18), ETSY (reports earnings Aug 2; AMZN competing service -Handmade service), BBY (earnings expected late August), W (earnings Aug 9), EBAY (reported last week), BABA(earnings mid August). Shipping - UPS and FDX (ATSG new partner). Cloud -- SKYY (ETF) RAX RHT CRM CSCO EQIX BLOX QLIK GIMO BV BCOV ORCL TWOU QTWO. Food delivery (been expanding Prime Now local restaurant delivery service): Grubhub (GRUB), Yelp (YELP) and Square (SQ). 

ETF/index components: S&P500 (SPX) 1.5%, Retail HOLDRS Trust (RTH) 15%, Consumer Dis Spdr (XLY) 13%, First Trust Cloud ETF (SKYY) 4%, SPDR Retail (XRT) 1%

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