Don't Overlook These Metrics From Amazon.com, Inc.'s Second Quarter

Growth rates from Amazon's subscription services, third-party seller services, and other often overlooked segments provide key insights.

The company's wide-spanning business means its results are difficult to sum up with just the headline figures like revenue and earnings growth Photo: REUTERS/Charles Platiau

By Daniel Sparks, The Motely Fool.

Amazon.com's (NASDAQ:AMZN) expectation-beating second-quarter results included plenty to like. But the company's wide-spanning business means its results are difficult to sum up with just the headline figures like revenue and earnings growth.

Considering Amazon's acquisition of Whole Foods last year, fast-growing subscription services and third-party seller services revenue, and surging growth in its other segment, there's plenty more for investors to analyze than the company's headline metrics. Sure, Amazon's 39 percent revenue growth and its 1,168 percent increase in earnings per share were impressive, but there's much more to the story.

Here are six key metrics that could easily be overlooked from Amazon's second-quarter earnings release that are worth considering.

1. Online stores revenue increased 12 percent

[post_ads]Amazon's second-quarter online stores revenue, which accounts for 51 percent of total revenue, increased 12 percent year over year when excluding the impact of currency changes. This extends a trend of decelerating growth rates for the segment. Online stores revenue increased 22 percent year over year in the third quarter of 2017, 17 percent in the fourth quarter of 2017, and 13 percent in the prior quarter on a constant-currency basis.

Of course, as you'll see below, there's still plenty of reason to expect more strong growth from Amazon.

2. AWS revenue increased 49 percent

Easily picking up the slack for Amazon's decelerating growth in online stores revenue is its accelerating cloud-computing business. Amazon Web Services (AWS) revenue increased 49 percent year over year, to $6.1 billion, accounting for about 12 percent of revenue.

AWS operating income increased even faster, rising 79 percent year over year, to $1.6 billion.

3. Subscription services revenue jumped 55 percent

Amazon's subscription services revenue, which includes Amazon Prime membership fees and fees from audiobook, e-book, digital video, digital music, and other non-AWS subscription services, continued to see impressive momentum in Q2. After accelerating on a constant-currency basis from 47 percent year-over-year growth in the fourth quarter of 2017 to 56 percent growth in Q1, the metric's growth rate, at 55 percent, remained close to this level in Q2.

Subscription services revenue was $3.4 billion, representing 6 percent of total revenue.

4. Third-party seller services revenue rose 36 percent

Fees Amazon charges sellers for seller services, fulfillment, and shipping increased 36 percent year over year on a constant-currency basis, slightly lower than 39 percent growth in the metric in Q1.

5. Physical-stores revenue was $4.31 billion

Thanks to Amazon's acquisition of Whole Foods in the second half of last year, Amazon registered $4.31 billion of sales from physical stores during the quarter, up from zero in the year-ago quarter. Notably, physical-stores sales were up slightly on a sequential basis, rising from $4.26 billion to $4.31 billion.

6. Amazon's other revenue soared 129 percent year over year

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On a constant-currency basis, Amazon's revenue in its other segment increased 129 percent year over year, to $2.2 billion, primarily driven by Amazon's advertising sales. The segment's momentum puts a finger on the company's fast-growing advertising business, which has morphed into a meaningful business for Amazon.

Exceptionally strong growth from AWS, subscription services, third-party seller services, and other revenue look poised to help Amazon continue growing at robust rates over the long haul, even if sales growth from online stores continues to decelerate.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.