|Amazon reports sales growth of 37%, topping estimates|
PUBLISHED THU, OCT 29 20203:31 PM EDT
UPDATED 12 MIN AGO
Annie Palmer @ANNIERPALMER
-- Amazon reported its third-quarter results after the closing bell on Thursday, soaring past analysts’ expectations for profit and sales, which grew 37% year over year.
-- For the fourth quarter, Amazon forecast operating income to fall between $1 billion and $4.5 billion, assuming about $4.0 billion of costs tied to COVID-19.
Amazon reported better-than-expected third-quarter results after the bell on Thursday, including soaring profits and 37% revenue growth.
The stock bounced around in extended trading after Amazon provided a wide guidance range for the fourth quarter.
Earnings: $12.37 vs $7.41 per share expected, according to analysts surveyed by Refinitiv
Revenue: $96.15 billion vs $92.7 billion expected, according to analysts surveyed by Refinitiv
Amazon said sales in the fourth quarter will be between $112 billion and $121 billion, which comes out to growth of 28% to 38% from a year earlier. Analysts were expecting revenue of $112.3 billion.
The company forecast operating income of $1 billion to $4.5 billion, assuming about $4.0 billion of costs tied to COVID-19. That’s a step up from last quarter, when Amazon said it would spend more than $2 billion on coronavirus-related measures, including procuring personal protective equipment, enhanced cleaning of its facilities and wage increases.
Amazon continues to be one of the biggest beneficiaries of the pandemic, as consumers flocked to the site for essential goods, groceries and household items. Amazon is expected to face even greater demand heading into the holiday season, with shoppers likely to do the bulk of their gift buying online instead of making trips to the store.
“We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season,” Amazon CEO Jeff Bezos said in a statement.
Bezos also touted Amazon’s recent job creation and treatment of warehouse workers, which has been a subject of scrutiny in recent months. The Amazon CEO pointed to Amazon’s $15 minimum wage and challenged other large employers to “make the jump to $15.”
Amazon is one of few companies that has continued to grow its headcount amid a broader economic downturn due to the coronavirus crisis. The company now counts more than 1.12 million full-time employees across the globe, an increase of 50% year over year. That figure doesn’t include Amazon’s network of contractors and temporary workers.
Amazon’s cloud-computing unit, Amazon Web Services, generated sales of $11.6 billion for the quarter, up 29% year over year and in line with analysts’ estimates, according to FactSet. Operating income in the segment of $3.54 billion topped estimates of $3.45 billion. The segment was helped by millions of people working from home.
The company’s “other” category, which is primarily comprised of its advertising business, saw revenue of $5.4 billion, up 51% year over year. Subscription services, which includes revenue from Prime memberships, climbed 33% year over year to $6.58 billion.
Once again, third-party sales grew faster than Amazon’s first-party business. Third-party sales increased 55% year-over-year, while first-party sales grew 38% year-over-year. Sales fell 10% in Amazon’s physical store unit, which includes Whole Foods Market.
Amazon shares are up 74% this year, the best performance among the five most valuable U.S. tech companies.
Three of those companies — Apple, Alphabet and Facebook — also reported quarterly results after the bell on Thursday and all exceeded analysts’ estimates.
Amazon will hold a call with investors to discuss its third-quarter results starting at 5:30 p.m. ET.