For the fourth quarter that involves the key holiday season, Amazon has given its sales forecast to be between $160 billion and $167 billion.
On Thursday, October 26, Amazon.com Inc (NASDAQ: AMZN) reported better-than-expected numbers for the third quarter. Amazonโs revenue for Q3 2023 jumped by 13%, a welcome development after a difficult 2022. As a result, the AMZN stock price surged by more than 5% during the extended trading hours.
Amazon Performance in Q3 2023
The companyโs earnings per share reached 94 cents, surpassing the anticipated 58 cents as reported by LSEG, formerly known as Refinitiv. Additionally, the companyโs revenue stood at $143.1 billion, slightly ahead of the expected $141.4 billion.
Amazon Web Services generated $23.1 billion in revenue, slightly below the expected $23.2 billion according to StreetAccount. The advertising segment performed impressively, with $12.1 billion in revenue, surpassing the projected $11.6 billion according to StreetAccount.
Additionally, the e-commerce giant also gave guidance for the fourth quarter, which will include the key holiday period.ย Amazon has provided its sales forecast for the fourth quarter with expectations ranging between $160 billion and $167 billion. Analysts had previously projected revenue of approximately $166.6 billion, as reported by LSEG. If Amazonโs guidance midpoint of $163.5 billion is achieved, it would signify a 9.6% growth compared to the previous year, where revenue amounted to $149.2 billion.
Amazonโs fundamental e-commerce business demonstrated ongoing recovery, with a notable 7% year-over-year expansion, following a 4% growth in the preceding quarter. This performance incorporates the outcomes of the annual Prime Day event, held in July this year. Amazon characterized it as their โlargest everโ sale.
Amazon Cost-Cutting Yields Results
Over the past year, Amazon has been actively focused on cost-cutting initiatives to address its rapid expansion during the pandemic. The company has reduced its workforce by 27,000 employees since the previous autumn and divested from less profitable ventures.
CEO Andy Jassy, who took over from founder Jeff Bezos in mid-2021, noted that these ongoing efforts to streamline operations are yielding positive results. In a statement, Jassy said:
โWe 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.โ
Amazonโs cost-saving measures are now reflected in its profit margin. The company disclosed an operating margin, which represents the profit remaining after deducting core operational expenses, of 7.8%, marking its highest level since early 2021.
Amazonโs digital advertising sector remains a strong point, benefitting from third-party sellers and major brands increasing their ad spending to enhance visibility in the fiercely competitive market. Ad revenue surged by 26% compared to the previous year, surpassing the growth of Googleโs ads at 9% and Facebookโs at 23%.
In the cloud computing realm, Amazon seems to be conceding some market share. Amazon Web Services (AWS), the leader among Microsoft Azure and Google Cloud, reported 12% growth for the quarter. In contrast, Microsoft recently revealed a 29% increase in Azure revenue, and Google Cloud expanded by 22%. AWSโs growth has slowed in recent quarters as larger enterprises have become more cost-conscious, although this trend is less pronounced now, according to Chief Financial Officer Brian Olsavsky.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
