Amazon keeps on redefining growth
Amazon is headed into the all-important holiday period by posting its fourth straight quarter of $1 billion in sales.
The retailer reported third quarter results late Thursday. Revenue increased 29 percent in the third quarter ended Sept. 30 to $56.58 billion, its slowest-growing quarter in more than a year and short of the average analyst estimate of $57.1 billion, but a company of Amazon's size growing at this kind of breakneck pace is nothing short of spectacular.
Amazon's North American sales were $34.3 billion, up 35 percent from last year, while international sales grew just 13 percent to $15.5 billion. The e-commerce giant reported earnings per share of $5.75 on revenue of $56.6 billion. Analysts polled by Bloomberg expected the company to report earnings of $3.14 per share on revenue of $57.07 billion.
Net income grew more than 10 times from the year-ago period, to $2.8 billion, helped largely by the company's cloud computing business, AWS, which grew sales 46%. The widening profits are largely driven by the growth of Amazon's high-margin businesses, including its cloud, advertising and third-party seller services.
For the current quarter, which includes the key holiday season, Amazon projected sales between $66.5 billion and $72.5 billion.
Operating income increased to $3.7 billion in the third quarter, compared with operating income of $347 million in third quarter 2017. For the fourth quarter, Amazon forecast operating income of between $2.1 billion and $3.6 billion.
“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries,” said Jeff Bezos, Amazon founder and CEO. “And we’re not slowing down – Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100. These organizations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control. The team is doing a fantastic job building and innovating for customers.”
Starting Nov. 1, Amazon has said it will raise its minimum wage to $15 an hour. Morgan Stanley is projecting that move alone could result in a cost increase of nearly $3 billion next year.
Another potential expense for Amazon is increased postal rates. The company has been under fire from President Trump for its usage of the U.S. Postal Service for deliveries, and the governmental agency recently said it was increasing rates.
And Amazon is expecting to make an announcement before the end of the year on its second headquarters, and Amazon will start building out a small first-phase of its new campus.