Executive Summary

• Amazon reported 2Q17 EPS of $0.40, compared with $1.78 in the year-ago quarter and missing the $1.41 consensus estimate. Net sales were $38.0 billion, up 24.8% year over year and beating the $37.2 billion consensus estimate.
• Retail Subscription Services was the fastest-growing segment, growing by 51.3% in the quarter, followed by Amazon Web Services (AWS) at 42.1%.
• Guidance for 3Q17 is for revenues of $39.25–$41.75 billion, with the $40.5 billion midpoint above consensus, and for operating income of $(400)–$300 million, well below consensus of GAAP operating income of $931 million.