While Amazon relies on AWS for a bulk of its profit, its central e-commerce business produced positive results in the third quarter. (Jim Young/Bloomberg News)
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Amazon.com Inc. projected profit and revenue in the current quarter that exceeded analysts’ estimates on optimism for a strong holiday shopping season.
Operating income will be $16 billion to $20 billion in the period ending in December, the company said Oct. 31 in a statement. Analysts, on average, projected $17.5 billion, according to data compiled by Bloomberg. Fourth-quarter sales will be as much as $188.5 billion, compared with an average estimate of $186.4 billion.
“As we get into the holiday season, we’re excited about what we have in store for customers,” CEO Andy Jassy said in the statement.
Amazon ranks. No. 1 on the Transport Topics Top 100 list of the largest logistics companies in North America. It also ranks No. 1 on the TT 50 list of the largest global freight carriers.
The cloud business, which suffered record low sales growth last year, continued to regain momentum during the third quarter. Amazon Web Services revenue jumped 19% to $27.5 billion, in line with estimates. Operating income generated by the unit was $10.4 billion, exceeding analysts’ average projection of $9.12 billion.
While Amazon relies on AWS for a bulk of its profit, its central e-commerce business produced positive results in the third quarter. Revenue from the online store unit increased 8% to $61.4 billion in the period ended Sept. 30 while sales at its fast-growing advertising unit rose 19% from a year earlier to $14.3 billion.
Total third-quarter sales gained 11% to $158.9 billion. Operating profit was $17.4 billion, compared with the average estimate of $14.7 billion. Total operating expenses rose 7.2% to $141.5 billion — marking the seventh consecutive quarter that Amazon’s revenue increased at a higher rate than costs.
“Amazon beat expectations in Q3 on the strength of the three pillars of its business: e-commerce, advertising and cloud services,” said Sky Canaves, an analyst at Emarketer.
The results show the fruits of Jassy’s years-long push to cut costs and streamline Amazon’s logistics operation. At the same time, Amazon and its cloud rivals, Microsoft Corp. and Alphabet Inc.’s Google, are pouring money into building new data centers to benefit from the huge demand for AI services, which depend upon immense computing power.
“Investors were concerned about the ability of the retail business to maintain margins and Amazon was able to actually grow margins, most impressively on the international side,” said Gil Luria, an analyst with D.A. Davidson & Co.
Amazon shares rose about 4% in extended trading after closing at $186.19 in New York. The stock had increased 23% this year through the close.
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