Amazon (AMZN, Financial) is one of a rare breed of companies that has an insatiable appetite to expand, and just the sheer number of things that the company attempts each year is mind boggling. But if there has been one chink in Amazon’s armor, especially in its retail operations, it has been Amazon’s International segment, which didn’t grow as fast as its North American counterpart in the past. But that may be changing, and it’s great news for Amazon investors.
Over the last 10 years, Amazon’s revenue in North America has been growing at strong, double-digit rates while revenue growth from the International segment slowed down considerably during the 2013-2015 period. Revenue from North America increased from $5.869 billion in 2006 to $79.78 billion by 2016, a thirteenfold jump.
Amazon has steadily expanded its International operations, which now include Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Spain and the United Kingdom. Amazon is also gearing up to start operations in the Middle East and Singapore. But despite the steady increase in the number of countries/regions, Amazon’s International revenues didn’t grow as fast as one would have expected.
Amazon’s International revenue touched $26.28 billion in 2012, but the company took three more years to add another $9 billion to that number. During the same period, Amazon added $28.89 billion in sales in North America. The difference has been stark, but Amazon has now picked up some speed overseas in the last year, and if it continues it will allow Amazon to post strong double-digit revenue growth rates over the next few years.
Amazon’s International revenue increased by 24.18% in 2016 compared to the 5.69% growth it posted a year ago. Thankfully, that growth didn’t come by chance, and we know that because the company posted stellar growth numbers this year as well. In the first two quarters of the current fiscal, Amazon reported $22.54 billion in sales, up from last year’s $19.410 billion, representing growth of 16.12%.
The stronger dollar took a huge bite, and Amazon’s growth numbers look a lot better when currency fluctuations are factored out. Amazon’s revenue in foreign markets is actually growing in excess of 20% for the last five quarters, and the consistency it has shown is a good indication that the growth is going to continue at that level for some time.
With global sales picking up speed, Amazon’s revenues should grow at a much faster rate in the next five years, compared to the last five.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
