Amazon Q3 2018 Earnings - Lower Revenue But Higher Profits

Amazon Q3 2018 Earnings - Lower Revenue But Higher Profits

Amazon's global sales grew at just 13% to $15.5 billion, compared to a growth of 29% a year ago.

Amazon expected sales in the holiday quarter leading up to Christmas to rise between 10 percent and 20 percent, or up to $72.5 billion, while analysts were expecting $73.9 billion, according to Refinitiv data.

On September 4, 2018, Amazon became the second publicly traded USA company after Apple to reach the $1 trillion (£768.8bn) market cap valuation, attesting its rapid growth and prominence within both the US economy and the worldwide technology sector.

As well, Amazon expanded its Prime Video product with new original shows, launched its Prime Book Box to all of its US-based Prime customers, setup shop in Turkey, improved Alexa, and much, much more. In the holiday period past year, Amazon saw sales of $60.5 billion. "They had been hitting on all cylinders so this is something investors weren't ready for", Chaim Siegel, analyst at Elazar Advisors, said.

That said, E-commerce titan Amazon has come a long way from its humble beginnings in 1994.

Fundamentals seem strong. Amazon reported net income 10 times higher than the same period a year ago, at $2.8 billion, again topping $1 billion for the fourth straight quarter.

"Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100", Bezos said.

Despite slower sales growth, Amazon has steadily become more profitable.




Analysts polled by Thomson Reuters on average expect Amazon to earn $3.14 a share, compared with 52 cents a share a year earlier. The growth is likely coming from Amazon's cloud business, its burgeoning advertising business, and its third-party sellers marketplace.

That means the company is collecting less revenue but taking in a lucrative cut of others' sales - all the more profitable when merchants pay Amazon to handle their shipping.

AWS is now commanding a 31 percent margin which is something that has been sorely lacking from Amazon's primary segments.

"They're indifferent if they sell us their own merchandise or third-party merchandise, so they shouldn't be punished for the latter", said Michael Pachter, an analyst at Wedbush Securities.

The weaker than expected third quarter results and guidance prompted analysts to cut fourth quarter revenue estimates.

Rivals are hoping to steal some sales from Amazon by mimicking its fast delivery. Operating income was $2 billion.

Close to two-thirds of Amazon workers are about to get a raise. Revenue jumped 46 percent QoQ and its actually enlarging its lead as the world's biggest provider of public cloud infrastructure.

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