Amazon delivered good results in Q3, but there’s a twist
Amazon.com increased its revenue by 13% in Q3 against the same period of last year, to $107 billion. The results were positively influenced by sales in North America, that surged by more than a fifth, and by data storage business.
Nevertheless, the company is operating in unstable ground, since international sales dipped.
Signs of fickle business become more obvious after warning on the upcoming holiday season erased $200 billion from the company’s market value, despite strong performance in the United States and neighboring countries.
Even though Amazon Web Service made good profits in the first nine months, when data storage business grew 27% to $21 billion, the colossus now run by Andy Jassy is caught in negative prospects about international sales.
A more than $8 billion in operating losses recorded from January through September is a proof that retailing isn’t consistently profitable.
To this, bleak economic outlook is added, despite 2.6% quarterly U.S. GDP growth reported on Thursday.
The Conference Board corporate research outfit is predicting a 96% likelihood of recession, so consumer confidence is to become the major disruption.
Amazon warned that fourth-quarter operating income could be as low as zero along with net sales projections that fell below what analysts were expecting, according to estimates gathered by Refinitiv, cited by Reuters.
Foreign exchange rates are partly to blame. Amazon is counting for almost 60% of its top line on North American sales, so a shrinking pie for selling electronics and books online doesn’t sound great.
Even more so since fund managers are now poring over the bottom line. Amazon needs to prove that its retail business is profitable, but timing couldn’t be worse in this economic uncertainty.
• Net sales increased 15% to $127.1 billion in the third quarter, compared with $110.8 billion in third quarter 2021. Excluding the $5.0 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 19% compared with third quarter 2021.
• North America segment sales increased 20% year-over-year to $78.8 billion.
• International segment sales decreased 5% year-over-year to $27.7 billion, but increased 12% excluding changes in foreign exchange rates.
• AWS segment sales increased 27% year-over-year to $20.5 billion, or increased 28% excluding changes in foreign exchange rates.
• Operating income decreased to $2.5 billion in the third quarter, compared with $4.9 billion in third quarter 2021.
• North America segment operating loss was $0.4 billion, compared with operating income of $0.9 billion in third quarter 2021.
• International segment operating loss was $2.5 billion, compared with operating loss of $0.9 billion in third quarter 2021.
• AWS segment operating income was $5.4 billion, compared with operating income of $4.9 billion in third quarter 2021.
• Net income decreased to $2.9 billion in the third quarter, or $0.28 per diluted share, compared with $3.2 billion, or $0.31 per diluted share, in third quarter 2021.
• Third quarter 2022 net income includes a pre-tax valuation gain of $1.1 billion included in non-operating income from the common stock investment in Rivian Automotive, Inc.