UPDATED 22:43 EDT / OCTOBER 22 2015

NEWS

Amazon smashes analyst predictions flat with Q3 sales up 23% to $25.4b

Amazon.com, Inc wowed Wall Street Thursday with the company reporting third quarter financial results that didn’t just beat market expectations but blew them away.

The company reported $25.4 billion on a profit of 17 cents per share for the period, versus the now possibly poorly regarded average analyst prediction of a loss of 13 cents per share on sales of $24.91 billion.

It was bells and whistles all round for Amazon with operating cash flow increasing 72 percent to $9.8 billion for the trailing twelve months, compared with $5.7 billion for the same twelve months ended September 30, 2014.

Free cash flow increased to $5.4 billion for the previous twelve months, compared with $1.1 billion for the trailing twelve months ended September 30, 2014.

The headline figure though, particularly given Amazon’s history of reporting losses, is the retail and cloud giants operating income which came in at a decent $406 million in the third quarter; sure it doesn’t sound like a huge number compared to some, but the same quarter last year saw the company report an operating loss of $544 million.

Net income was $79 million in the third quarter, or $0.17 per diluted share, compared with net loss of $437 million, or $0.95 per diluted share in the third quarter 2014.

North America drove the company’s increase returns in the quarter with sales of $15 billion, up 28 percent from $11.7 billion versus the same quarter in 2014, while international sales were up $7.7 billion to $8.3 billion compared to the same quarter of last year.

International sales growth, at least on paper seems to be slowing with net sales up 7 percent versus the same period in 2014, and sales grew 14 percent again year-on-year; of note though Amazon did make particular mention that at least some of their international operations were expanding, with Amazon Mexico growing to some 32 million items with expanded delivery options, and Amazon India becoming the largest e-commerce store in India with over 30 million items in stock, complete with a remarkable growth rate of 40,000 products every, single, day, during 2015.

The star of the numbers though, at least as the market looked at it, was growth at Amazon’s cloud services business, with Amazon Web Services reporting $2.1 billion in revenue on a profit of $521 million for the quarter, up 81 percent in sales and over 400 percent in profit year-over-year, and remarkably a figure nearly as large as the company’s e-commerce profit in North America.

Multi-tier strategy

Amazon was not remiss in boasting about its multi-tier strategy across its diverse product portfolio, from basic consumer products such as the Amazon Fire through to its last products from AWS, including most recently Snowball.

“I will point out that this quarter showed a lot of innovation, a lot of new products and features and a lot of investment,” Amazon Chief Financial Officer Brian Olsavsky told investors on a conference. “We’ve already talked about india, but domestically, globally we are investing very heavily in our Prime platform. We’ve launched multiple devices including e-readers, tablets priced under $50, Echo dash buttons, so there’s a lot of investment going on, and there will continue to be, especially related to prime. Innovation and investment will continue and can be lumpy over time.”

The full set of numbers for Amazon’s quarter three financials can be found here.

Image credit: luxuryluke/Flickr/CC by 2.0


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