Numbers can be confusing, especially with the fast and changing atmosphere of the stock market. But these are also keys to a successful investment venture. As a new Amazon seller, you must understand that Amazon earnings report will help you see if the platform is doing well or not. You shouldn’t base your decisions on estimates. Instead, you should be working with concrete data. Read further to know more about it.
What is an "Amazon Quarterly Earnings Report"?
All publicly-traded companies (including Amazon) are required, by law, to file their earnings reports to the Securities and Exchange Commission (SEC). Specifically, companies need to file the following:
- an annual report (10-K) (audited and more comprehensive)
- a quarterly report (10-Q) with the SEC (unaudited)
- Form 8-K or “current report” (released when there are significant events that shareholders need to be informed about; in lieu of this, some companies also issue press releases and summary presentations or decks.
What’s included in the SEC Form 10-Q?
Form 10-Q has two main parts: the Financial Information and Other Information.
Financial Information contains the financial statements that include:
- Consolidated cash flow reports
- Statement of operations
- Statement of Comprehensive income (loss)
- Consolidated Balance Sheets
- Notes to consolidated financial statements
The first part of the report shows how much the beginning balance is, an itemized statement of all transactions, and the ending balance during the quarter cut-off. Financial statements essentially form a map of how cash flows in and out of the company, losses, costs, expenditures, profits, and acquisitions for the quarter's duration.
The SEC beginner's guide to financial statements summarizes and explains this well.
Other Information contains:
- Legal proceedings
- Risk factors
- Unregistered sales of equity securities and the use of proceeds
- Defaults upon senior securities
- Amazon also includes other information like Mine Safety Disclosures and Exhibits
The second part of the report includes information that shareholders need to know. It’s where Amazon presents discussions about significant events, factors, services, and more. These further explain the company's current status, plans, and risk assessments.
When Is the Amazon Earnings Announcement Made? Where Can You Access This?
Amazon is a Large Accelerated Filer, which means they have 40 days from the end of the quarter to file and share their quarterly earnings report. Should they fail to submit reports within the given timeframe, they would result in penalties.
Everyone is free to access these reports in SEC's EDGAR Database. Just use the search bar and type “Amazon.” You’ll then be redirected to the page where all filed and submitted Amazon reports can be viewed.Another option is to visit Amazon's official website and click on Investor Relations (you should find this at the bottom of the page). You’ll be redirected to a page that compiles all of Amazon's SEC documentation, press releases, and other investor-related information.
How do you read it?
Now that you know when these announcements are made and where to access them, it's now time to make sense of it all.
- Financial Statements - Think of this as a map. The beginning balance is the starting point. You can view items and transactions that take place within the quarter. Finally, you reach the ending balance hoping to have more profit than losses. These statements also include:
- The income statement reveals how much money Amazon made.
- The balance sheet shows assets and liabilities, referring to how much Amazon possesses versus how much they owe.
- Cash flow visualizes how money flows between exchanges and deals.
- The shareholder equity is the value of Amazon's shares and the potential dividend earnings for investors.
- Legal Proceedings - They cost money and affect the public perspective towards a company. Naturally, details of legal proceedings are present in the earnings report.
Risks - For transparency, Amazon lists all the possible risks of its activities and plans. These include operating risks, foreign exchange risks, loss of senior management personnel, supplier risks, risks related to a system interruption, and others. This full disclosure allows investors to be more mindful of the state of the company and the market in general.
Which of these should mean the most to you?
Revenue is the income for the quarter against inflation and other costs. Expectations for the next quarter are based on a previous Amazon earnings report. If net sales or net income are unfavorable, so too are future Amazon shares.
The Importance of Knowing Amazon’s Earnings Report to Sellers
As an Amazon seller, you might feel like knowing these things shouldn’t be of utmost importance. However, knowing how to read these reports (at the very least!) can help you make decisions that would definitely affect your business firsthand. Here are other reasons why you should check Amazon’s reports every now and then:
- These reports provide valuable insights into what customers are looking for, which can help guide your efforts in pricing, marketing initiatives, and product selection.
- They give you an idea of how well the company is doing. These will help you make informed decisions before investing in new products or services that are meant to benefit the Amazon ecosystem.
- They indicate Amazon’s ability or willingness to invest in various initiatives that may benefit your business.
- They will provide you with a better understanding of the current trends in the market. This is important when deciding which products or services to focus on and which are likely to be more successful than others. Knowing what customers are looking for now can help you choose products they'll be interested in purchasing later.
- They give insights into the industry's competitiveness at any given time. With this knowledge, you can plan your pricing strategies and product selection. Moreover, you’ll learn about potential opportunities for growth and expansion within your businesses.
Why Is It Helpful?
Quarterly earnings reports are windows to a company's work and cash flow. They reflect if a company has good financial managers by gauging its performance and balancing loss and profits. So, no surprise that these report cards can also affect the market stock prices.
Aside from insights, Amazon's earnings report shows interested investors how risky or safe their company is. Investors vary from one another. Some are into risky investments that promise better returns while some would like to play it safe. So, an earnings report, like the 10-Q, can help one decide whether a company is within your risk spectrum.
Overall, Amazon earnings reports, quarterly or otherwise, are invaluable tools and deciding factors for both long-term and short-term investors.
Final Thoughts
Whether you're interested in investing in Amazon stocks or are already a shareholder, a quarterly earnings report is one way to get a comprehensive look at Amazon's financial status. It’s an informative document that allows Amazon to be transparent with its partners. Disclosure and discussion of projects and activities are included to help investors understand where Amazon is headed, moving forward, and whether or not the risks are worth it.
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