Amazon released its third-quarter earnings, leaving analysts starstruck with results that surpassed expectations. The shares of the e-commerce giant reportedly skyrocketed by more than 6% on Friday, Oct. 27.
Amazon's Revenue Soars by 13% in Q3 Earnings Report
Amazon has recorded a 13% increase in its Q3 earnings estimates, exceeding the experts' expectations.
With financial analysts predicting that Amazon won't surpass its year-over-year revenue, the company needed to prove that it's only a matter of time before it achieved impressive results.
For the third quarter, Amazon's revenue reportedly improved to 13%, accounting for an increase of $143.1 billion, CNBC writes in its report.
That's not the only jaw-dropping record since Amazon also hit a net income that tripled its value. It surged to $9.9 billion which also amounts to 94 cents per share.
Compared to the past record in 2022 which only reached $2.9 billion, this year's record was above expectations. At that time, Amazon only collected 58 cents per share.
CEO Andy Jassy's Cost-Cutting Strategy
CEO Andy Jassy has been on a mission to navigate through the challenges posed by high inflation and escalating interest rates.
In response, Amazon carried out its most extensive layoff campaign to date, resulting in a reduction of 27,000 jobs since the previous fall. Corporate hiring was put on hold, and Jassy meticulously examined cost-cutting measures across various units within the company.
Moreso, Amazon's financial report revealed an impressive operating margin of 7.8%, marking the highest figure since it achieved a record 8.2% in the first quarter of 2021. The reported margin a year ago was only 2%.
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Amazon Leans into AI Development
Analysts have expressed optimism regarding Amazon's performance. Jefferies analysts highlighted the continued improvements in the company's margin profile, emphasizing the potential for an AWS (Amazon Web Services) acceleration and long-term AI opportunities that will positively impact Amazon's financial model.
On the other hand, Blair analysts lauded Amazon's exceptional performance for the quarter, particularly its significant improvement in operating income growth. They also commended the company's renewed focus on generative AI and identified positive signs related to AWS' growth rate.
Meanwhile, Goldman Sachs analysts echoed the sentiment, acknowledging that Amazon's third-quarter results exceeded expectations. They emphasized the company's strong risk-to-reward ratio, leaning heavily in a positive direction.
"Looking over a multi-year timeframe, we reiterate our view that Amazon will compound a mix of solid revenue trajectory with expanding margins as they deliver yield/returns on multiple-year investment cycles," they wrote in a Friday note.
With Amazon now in the position to compete with other tech giants, its e-commerce growth is projected to progress for the years to come. It might explore other areas of development outside this industry which include satellite technology, grocery, and healthcare.
As a summary, here's the earnings rundown that Bloomberg compiled via Yahoo.
- Net sales: $143.08 billion actual, versus $141.56 billion expected
- AWS net sales: $23.06 billion actual, versus $23.13 billion expected
- Earnings per share: $0.94 actual, versus $0.58 expected
- Operating margin: 7.8% actual, versus 5.46% expected
- Q4 net sales: $160 billion-$167 billion actual, versus $166.57 billion expected
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