Amazon beats on profit after Prime Day sales surge

Violet Tucker
October 28, 2017

Amazon's stock jumped seven per cent in after-hours trading yesterday after it released its Q3 financial reports, showing a 34 per cent increase in revenues year-on-year and beating expectations, a much needed boost for the company after last quarter, when it missed Wall Street's predictions and saw stocks drop as a result.

Although AWS has continued to be a massive profit driver, accounting for almost 10% of total revenue in Q3, sales growth for the cloud service actually slowed down for the eighth straight quarter.

Amazon's net income for the quarter was $256 million, up from $252 million in the year-ago quarter.

The Seattle company's revenue gains were thanks in part to its $13.7 billion acquisition of Whole Foods, which brought in $1.3 billion in sales during the three-month period. Amazon's earnings per diluted share fell short of a MarketBeat-published analyst average estimate of $1.09.

"Advertising revenue continues to grow very quickly and its year-over-year growth rate is actually faster than the other revenue line item that you see there [59 per cent]", Olsavsky said. Without these sales, revenue increased 29% year over year to $42.4 billion. Even factoring out the acquisitions of Whole Foods and Souq, Amazon's headcount climbed 47 percent over this time a year ago.

The company said it expected between $56 and $60.5 billion of sales in the fourth quarter, which is always the company's biggest. The e-commerce and cloud computing giant crushed Wall Street's expectations and its own guidance across the board. Along with AWS, Business Prime Shipping gives Amazon another service offering for the growing B2B e-Commerce market.

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Amazon forecast fourth quarter operating income to range from $300 million to $1.65 billion.

Amazon's Alexa-enabled devices remain a hit with customers.

"In the last month alone, we've launched five new Alexa-enabled devices, introduced Alexa in India, announced integration with BMW, surpassed 25,000 skills, integrated Alexa with Sonos speakers, taught Alexa to distinguish between two voices, and more", Bezos said. The move is interesting, as I am sure there are not many people with Amazon Echo products who do not also have Prime.

Amazon is blazing a trail here with Jeopardy! and in a statement said they will notify developers when the tool becomes more broadly available. The midpoint of Amazon's guidance for that period now sits at $68 billion, including a $4.4 billion Whole Foods contribution.

Amazon now pays developers out of its own pocket to create the skills, which Echo users are then able to download and install onto their Alexa at no charge.

Other reports by Guamnewswatch

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