Amazon Posts Record Profit, but Disappoints on Revenue and Outlook

Amazon Posts Record Profit, but Disappoints on Revenue and Outlook

Indeed, shareholders seemed to focus on the negative.

Shares of the company were down 9.7% at $1 610 in trading before the bell.

Q3 revenue: $US56.6 billion. But that still fell shy of the $57.1 billion analysts had predicted. In the third quarter past year, Amazon pulled in $43.7 billion in sales.

"Shares are up 52% YTD, hence this kind of "growth scare" is likely to weigh on sentiment in the near term, but ultimately will work itself out (likely by 1Q19)", Barclays analyst Ross Sandler wrote in a client note. Specifically, they were hoping for numbers between $66.5bn (£51bn) and $72.5bn (£56bn). By the close on Wall Street last night the Nasdaq was down nearly 11 per... Capital expenditures soared to $5.3 billion from $3.5 billion past year, with 20 data center sites in development, Porat said. But its outlook implies a profit of between $3 a share and $5.54 a share, assuming its interest income, interest expense, tax rate, and share count remain about the same. Analysts had previously forecast it would earn $US5.79 a share in the quarter.

On the brighter side was data that showed gross domestic product increased at a 3.5 percent annualized rate in the third quarter as a tariff-related drop in soybean exports was partly offset by the strongest consumer spending in almost four years and a surge in inventory investment.

Additionally, Amazon earlier this month said it will boost its minimum wage to $15 an hour, with the change taking effect next Thursday.

Sales from Amazon's main online stores rose 11 percent from a year earlier, while the Amazon Web Services cloud-computing unit reported a 46 percent increase in sales.

We were particularly impressed by the continued YoY operating margin expansion, which is consistent with our view the company has transformed into a 'profit machine, ' driven by multiple tailwinds (most notably AWS, which posted an over 30% operating margin for the first time).

Olsavsky, the CFO, also said the company is operating more efficiently, hiring less than in the past and adding less warehousing space. That division saw sales jump 35% to $US34.3 billion. Earnings from the segment surged to $2 billion from just $112 million in the third quarter past year.

Those results were inflated by the company's acquisition of Whole Foods. In the last four quarters, sales increased between 29 percent and 43 percent.

Amazon also benefitted from strong sales of its Prime subscription program. Earnings easily beat expectations by 86%, but revenue missed analysts estimates by 1%.

The company now groups its advertising group under "other" on its balance sheet.

Amazon's all-time high record stock price was $2,050.50 (£1,577.68) per share on September 4, 2018, the same day it hit the $1 trillion (£768.8bn) market cap.

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