Amazon (AMZN) -) posted better-than-expected third quarter earnings Thursday, powered by solid ad sales and could services gains, but issued a muted near-term sales forecast that suggests muted consumer spending over the holiday period.
Amazon said net income for the three months ending in September was pegged at $9.9 billion, or 94 cents cents per share, rising from 28 cents over the same period last year and well ahead of the Street consensus forecast of 58 cents per share. Operating income rose more than five-fold from last year to $11.2 billion, well ahead of the Street forecast of $7.7 billion.
Revenues rose 12.6% from last year to $143.1 billion, also firmly ahead of analysts' estimates of a $141.42 billion tally. Amazon Web Services contributed $23.1 billion in revenues, rising 12% from last year, a similar pace from the three months ending in June but coming in just shy of the Street forecast of around 12.5% growth.
Online sales were 6% higher from last year to $57.27 billion, suggesting moderately improving consumer spending over the summer, with the topping Street forecasts of $56.8 billion. Ad sales rose 26% to $12.1 billion.
Looking into the current quarter, Amazon said it sees operating income of between $7 billion and $11 billion, compared to a Street forecast of $8.5 billion, on revenues in the range of $160 billion to $167 billion, compared to the Refinitiv forecast of around $167 billion.
Related: Amazon earnings on deck with AI, web services, FTC monopoly challenge in focus
“We had a strong third quarter as our cost to serve and speed of delivery in our Stores business took another step forward, our AWS growth continued to stabilize, our Advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” said CEO Andy Jassy. “The benefits of moving from a single national fulfillment network in the U.S. to eight distinct regions are exceeding our optimistic expectations, and perhaps most importantly, putting us on pace to deliver the fastest delivery speeds for Prime customers in our 29-year history."
"The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI, where the combination of our custom AI chips, Amazon Bedrock being the easiest and most flexible way to build and deploy generative AI applications, and our coding companion (CodeWhisperer) allowing enterprises to have the equivalent of an experienced engineer who understands all of their proprietary code is driving momentum with customers," he added. "Between AWS re:Invent and our 29th holiday shopping season, this is a particularly action-packed time of year at Amazon and we’re excited for what’s to come.”
Amazon shares, which closed 1.5% lower at 119.57 in the Thursday session, were marked 0.23% lower in after-hours trading immediately following the earnings release to indicate a Friday opening bell price of $119.29 each.
- Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
