Amazon Earnings: What to Watch

Amazon.com Inc. is scheduled to announce its first-quarter earnings after the market closes on Thursday. Here's what you need to know:

EARNINGS FORECAST: Analysts polled by Thomson Reuters expect Amazon to earn $1.12 per share excluding certain items, compared with unadjusted results of $1.07 per share a year ago. The company forecast operating income of between $250 million and $900 million, compared with $1.1 billion a year ago.

REVENUE FORECAST: Quarterly revenue of $35.3 billion is forecast by the analysts, compared with $29.1 billion a year ago. Amazon said it expected sales of between $33.25 billion and $35.75 billion for the quarter.

WHAT TO WATCH:

-- PROFIT: For years, Amazon's revenue growth and investments have largely come at the expense of profit, but the online retail giant appeared to exhibit more discipline to preserve its bottom line in the fourth quarter. Still, the company has entered a period of heavy investments, something that analysts expect to last at least into next year. Amazon is creating 130,000 U.S. jobs through mid-2018 and rapidly expanding its network of warehouses domestically, something signaling expectations for big growth. But while sales are again expected to grow at a rapid rate in the first quarter, Amazon's heavy spending could upend the precarious balance act to ding profitability.

-- INTERNATIONAL EXPANSION: Amazon is heavily spending on international expansion, now that it has largely saturated the U.S. market. Amazon introduced Prime in Mexico in the first quarter and said last week it is launching a retail business in Australia. International sales last year were $43.98 billion, up 24% from 2015 and about a third of total revenues. Still, the division posted an operating loss, and analysts have expressed concern about the high level of investments made by the company to grow overseas. Expect updates from executives on initiatives abroad -- especially in China and India, where the company is fighting for market share against domestic incumbents.

-- SHIPPING: Another big factor in increased costs is Amazon's ambition in transportation. In the first quarter, Amazon announced it is building its first air hub in Kentucky and it is also planning to add airfreight capacity for Chinese customers. Evidence is mounting that Amazon is entering the market as an end-to-end transportation provider (something people familiar with the matter confirm privately). But will executives shed more light on its strategy? The notoriously private company may be choosing to stay mum on the topic in part due to the fact that it still relies heavily on partners like United Parcel Service Inc.

-- CONTENT: Executives may take the chance to tout their Oscar nomination for best picture, as well as two wins for "Manchester by the Sea." With those, Amazon became the first internet company to win an Academy Award. More important, it may drive more consumers to subscribe to the company's Prime annual membership program. Prime subscribers, who pay an annual fee of $99 in the U.S. for access to videos, free, two-day shipping and a host of other perks, spend a lot more on average on the retailer's site, according to analysts. Critical acclaim can't hurt sign ups.

Write to Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

April 27, 2017 08:14 ET (12:14 GMT)