Amazon unveiled its Q3 results on Thursday, surpassing the predictions set by analysts. This led to a surge in its stock during post-market trading.

Breakdown of the Results:

  • Earnings: Amazon reported earnings of 94 cents per share, which surpassed the 58 cents anticipated by LSEG (previously known as Refinitiv).
  • Revenue: The company achieved a revenue of $143.1 billion, outpacing the $141.4 billion projected by LSEG.

Segmental Analysis:

  • Amazon Web Services (AWS): AWS generated $23.1 billion, slightly falling short of the expected $23.2 billion as forecasted by StreetAccount.
  • Advertising: The segment brought in $12.1 billion, beating the anticipated $11.6 billion.

Anticipations for the Q4 sales, which encapsulates the crucial holiday season, are set between $160 billion to $167 billion. This mid-point estimation represents a 9.6% increase from the previous year.

Despite the challenges faced in 2022 with rampant inflation and surging interest rates, the company witnessed a 13% leap in its Q3 revenue.

Having expanded rapidly during the pandemic, Amazon embarked on a series of cost-cutting measures over the past year, leading to the layoff of 27,000 employees.

Andy Jassy, who took over as CEO from Jeff Bezos in 2021, highlighted the benefits of these austerity measures. He stated, “The third quarter was commendable, as our operational efficiency and AWS stability improved, advertising revenue surged, and there was a notable rise in operating income and cash flow.”

Amazon’s primary e-commerce sector saw a 7% year-on-year growth, with a significant contribution from their most successful Prime Day sale to date, held in July.

Furthermore, the company’s net income skyrocketed to $9.9 billion from last year’s $2.9 billion, reflecting a pre-tax gain of $1.2 billion from their investment in the electric car firm, Rivian.

While both Alphabet and Meta also had positive earnings this week, their stocks suffered due to various challenges. Amazon’s stock too felt the ripple effect, dropping 6%.

Nevertheless, digital advertising has been thriving for Amazon, registering a 26% annual growth. This surpasses the growth observed in giants like Google and Facebook.

In the realm of cloud computing, Amazon seems to be facing stiff competition, with AWS recording a 12% growth, trailing behind Microsoft’s Azure and Google Cloud.

Brian Olsavsky, the Chief Financial Officer, discussed cost optimization and expressed optimism about AWS’s future.

Signifying their commitment to cost-efficiency, Amazon’s operating margin reached 7.8%, the highest since early 2021. CEO Andy Jassy, in a conversation with analysts, expressed optimism about AWS’s growth trajectory, mentioning several significant deals expected to be reflected in Q4.