Amazon Q3 Earnings: Revenue and Profits Surpass Expectations, Cloud Computing and Advertising Drive Growth

Amazon Q3 Earnings: Revenue and Profits Surpass Expectations, Cloud Computing and Advertising Drive GrowthOn Thursday, US retail giant Amazon released its earnings report for the third quarter of 2024, ending September 30th. The report showed that Amazon's Q3 revenue reached $158

Amazon Q3 Earnings: Revenue and Profits Surpass Expectations, Cloud Computing and Advertising Drive Growth

On Thursday, US retail giant Amazon released its earnings report for the third quarter of 2024, ending September 30th. The report showed that Amazon's Q3 revenue reached $158.9 billion, a 11% year-on-year increase. Operating profit was $17.4 billion, a 55% year-on-year increase, while net income reached $15.3 billion, representing a 55% year-on-year growth. Diluted earnings per share reached $1.43, up 52% from last year. Driven by growth in cloud computing and advertising businesses, Amazon's Q3 earnings and revenue surpassed expectations, sending the stock up over 4% in after-hours trading.

Revenue and Profits Exceed Expectations

Amazon's net sales in the third quarter increased by 11% to $158.9 billion, exceeding analysts' average expectation of $157.2 billion. Excluding the unfavorable impact of currency fluctuations, net sales increased by 11% compared to Q3 2023. Operating profit reached $17.4 billion, up 55% from $11.2 billion in Q3 2023. Net income reached $15.3 billion, with diluted earnings per share at $1.43, exceeding analysts' average forecast of $1.14.

Cloud Computing and Advertising Lead the Way

Amazon's cloud computing service AWS generated $27.452 billion in net sales during the third quarter, representing a 19% year-on-year increase, slightly below analysts' general estimate of $27.5 billion. However, its operating profit reached $10.447 billion, a 19% increase compared to the previous year, surpassing analysts' average forecast of $9.12 billion.

In terms of advertising, Amazon's advertising services achieved $14.331 billion in net sales during Q3, a 19% year-on-year increase, aligning with analysts' average predictions. This growth rate even surpasses the growth rate of Amazon's core retail business.

Other Business Performances

Amazon's online store generated $61.411 billion in net sales during Q3, representing a 7% year-on-year increase. Amazon's physical stores achieved $5.228 billion in net sales during Q3, a 5% year-on-year increase. Amazon's third-party seller services achieved $37.864 billion in net sales during Q3, a 10% year-on-year increase. Amazon's subscription services generated $11.278 billion in net sales during Q3, representing an 11% year-on-year increase.

Significant Growth in Operating and Free Cash Flow

Amazon's operating cash flow in Q3 surged 57% to $112.7 billion. Free cash flow increased to $47.7 billion. Free cash flow less principal repayments for finance leases and finance obligations increased to $44.9 billion in the trailing twelve months. Free cash flow less principal repayments for equipment finance leases and all other finance leases and finance obligations increased to $46.1 billion in the trailing twelve months.

Executive Comments

Andy Jassy, Amazon's President and CEO, said: We are looking forward to serving customers with a fantastic array of services as we approach the holiday season. We kicked off the holiday shopping season with the biggest Prime Day ever, and launched a new Kindle lineup thats exceeding expectations. We have a lot more to come, including tens of millions of deals, our live NFL Black Friday events, and Brian Williams deep dive on Election Day on Prime Video. And well be showcasing more than 100 new cloud infrastructure and AI features at re:Invent later this month.

Earnings Analysis

Amazon's strong performance in Q3 was driven by growth in cloud computing and advertising businesses. While AWS's revenue growth rate is slightly lower than its main competitors, its operating profit margin remains high. The growth in advertising business reflects Amazon's strong competitiveness in the online advertising market.

It is worth noting that Amazon's operating profit in Q3 grew 56% year-on-year to $17.4 billion. This demonstrates Amazon's focus on efficiency and continuous cost reduction efforts, constantly enhancing its profitability.

Outlook

Amazon expects its net sales in Q4 to range from $181.5 billion to $188.5 billion, representing a 7% to 11% year-on-year increase compared to Q4 2023. The company also expects Q4 operating profit to range from $16 billion to $20 billion.

Stock Price Movement

On Thursday, Amazon's stock price fell 3.28% to close at $186.4 per share. However, after the earnings report was released, the stock rose over 4% in after-hours trading due to the Q3 revenue and profit exceeding analysts' expectations.

Summary

Amazon's Q3 earnings report shows that the company's revenue and profits surpassed expectations, driven by growth in cloud computing and advertising businesses. Although the retail business faces challenges, Amazon's profitability is continuously improving. In the future, Amazon will continue to invest heavily in cloud computing and advertising businesses while actively addressing the challenges in the retail business.

Key Highlights of Amazon's Q3 Earnings:

• Net sales increased by 11% to $158.9 billion.

• Operating profit was $17.4 billion, a 55% year-on-year increase.

• Net income reached $15.3 billion, with diluted earnings per share at $1.43.

• Operating cash flow surged 57% to $112.7 billion.

• Free cash flow increased to $47.7 billion.

• AWS net sales reached $27.452 billion, a 19% year-on-year increase.

• Advertising services achieved $14.331 billion in net sales, a 19% year-on-year increase.

• Amazon expects its net sales in Q4 to range from $181.5 billion to $188.5 billion, representing a 7% to 11% year-on-year increase compared to Q4 2023.

• Amazon expects Q4 operating profit to range from $16 billion to $20 billion.

Other Important Information:

• Amazon's main businesses include e-commerce, cloud computing, and advertising.

• Amazon is one of the world's largest e-commerce platforms.

• Amazon's cloud computing service AWS is one of the world's largest cloud computing service providers.

• Amazon's advertising business is growing rapidly.

• Amazon's stock price has performed well over the past year.

Special Notes: