Amazon’s Third Quarter Results & Conservative Revenue Targets

Amazon’s Third Quarter Results & Conservative Revenue Targets


Amazon left behind the earning expectations of $2.1 Billion by analysts for Q3 after touching the $3.7 Billion announced in the report for Q3 on Thursday afternoon. Conservative revenue targets of $66.5 B to $72.5 B for Q4, Amazon, AMZN, has to face decline of -10% during the mid of the trading hours. This resulted, a ditch of share value from $1650 straight to $1600 at closing, biggest decline after since an 11 percent drop in January 2014.

The quarterly report announced later on Thursday, revealed Q3’s following important facts and figures of the Amazon, AMZN:

  • Revenue gained $56.6 billion (Estimates according to Refinintiv were $57.10 billion)
  • Overall business is facing slightly decelerating growth.
  • AWS revenue touched $6.68 billion (Estimates according to FactSet were $6.71 billion)
  • Relatively more growth rate of Amazon’s high-margin businesses than its core retail segment. Advertising Services and Cloud are making more profit than Retail Segment of Amazon.
  • EPS remained $5.75 (Estimates according to Refinitiv were $3.14)

Every year because of the holidays, the Q4 is to be considered not only the biggest but also most important sales period for Amazon. In a conference call Thursday afternoon, Amazon Chief Financial Officer Brian Olsavsky said that: “Much of our revenue for the quarter but also for the year comes in a very tight window between the middle of November and the end of the year, so it’s always very difficult for us to estimate”. He also pointed out the factors which can impact on Q4 revenues negatively, comprising of:

  • Currency Exchange Rates
  • Whole Food Market acquisition last year
  • Practice of Accounting for revenue generated by Prime Subscription only in Q4 now to be accounted for in every quarter.

He further added, “We are very bullish on the fourth quarter and we just have to see how revenue comes in”.

Despite conservative revenue guidance by Amazon, AMZN, in fourth quarter, Analysts on average are projecting a revenue generation of $73.8 Billion for it.

“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 CEO. He also highlighted for business customer, Amazon as marketplace and its Business growth.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.