, Inc. Earnings: Crushing the Bears

Amazon stock was rising by an explosive 6.8% on Thursday after the market close, as the company delivered a broadly strong earnings report for the first quarter of 2015. Let's take a look at the latest announcement from Amazon, and why it looks like a big victory for the bulls in the always-intense battle of Amazon bulls versus bears.

Accelerating sales growthNet sales during the first quarter of 2015 were $22.72 billion, a 15% increase versus $19.74 billion in the first quarter of 2014. Excluding the unfavorable impact from changes in foreign exchange rates, net sales grew 22% year over year.

This is quite a strong performance for a company as big as Amazon, and the number was also better than expected by analysts, as Wall Street was, on average, projecting $22.39 billion in total sales for the quarter. Amazon's guidance was for sales to be in the range of $20.9 billion to $22.9 billion, so sales came in above the company's guidance, too.

Importantly, growth is even accelerating versus prior quarters. By comparison, sales in the fourth quarter of 2014 grew 15% year over year in U.S. dollars, and 18% in constant currency. Even when excluding the rapidly growing Amazon Web Services segment, sales growth accelerated both in the U.S. and in international markets.

Fears about the possibility of decelerating growth have been a major concern for investors regarding Amazon stock in the last several quarters, but the financial figures from the latest report confirm the Amazon growth story is as strong as ever.

Improving cash flows and profitsOperating income grew 74%, to $255 million, in the last quarter compared with an operating gain of $146 million in the same quarter last year. This was considerably above guidance; the company was expecting operating results to be between a $450 million operating loss and a $50 million operating gain.

Cash flows are looking remarkably healthy. Operating cash flow grew 47%, to $7.84 billion, for the trailing 12-month period ended in March 31, 2015 vs. $5.35 billion in the trailing 12 months ended March 31, 2014. Free cash flow during the year more than doubled -- to $3.16 billion from $1.49 billion.

The company lost $0.12 per share during the quarter, marginally better than the $0.13 loss per share forecasted, on average, by Wall Street.

Amazon not only delivered accelerating sales growth during the last quarter; the company also did it without eroding margins too much. In fact, profit margins even improved versus prior quarters.

Operating margin in North America increased to 3.9% of revenues versus 2.7% in the first quarter last year. This is particularly encouraging, as it shows that Amazon is successfully buffering the increasing costs in areas such as fulfillment expenses.

Amazon Web Services is huge and growing rapidlyThis was the first quarter that Amazon disclosed financial information for its Amazon Web Services -- AWS -- cloud-computing segment, and the business looks remarkably strong. Sales during the first quarter were $1.57 billion, growing by an impressive 49% year over year. AWS is also quite profitable: Segment operating income was $265 billion versus $245 billion in the same period last year.

CEO Jeff Bezos even bragged in the earnings report about Amazon's performance in AWS: "Amazon Web Services is a $5 billion business and still growing fast -- in fact, it's accelerating."

To wrap up, sales are growing rapidly and even accelerating, profit margins showed signs of improvement, and the AWS division looks remarkably exciting. Investors in Amazon stock have valid reasons to applaud the company's latest earnings report.

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