Amazon's Q3: $17.09B in revenue; shares climb in after-hours trading

Amazon's Q3: $17.09B in revenue; shares climb in after-hours trading

Summary: Once again, Amazon attributed a net loss flailing daily deals seller LivingSocial. Still, the rest of the report didn't look half bad.

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With a quarter that included some major additions to its popular Kindle Fire tablet brand, Amazon reported third quarter earnings after the bell on Thursday.

The cloud giant reported a net loss of $41 million, or nine cents per share (statement). Once again, Amazon attributed the poor showing here to its assets involving flailing daily deals brand LivingSocial.

The EPS loss on a non-GAAP basis equaled nine cents per share on a revenue of $17.09 billion.

Wall Street was expecting a loss of nine cents per share on a revenue of $16.76 billion.

Thanks to making those goals, Amazon shares were up by nine percent initially in after-hours trading.

CEO Jeff Bezos, who took it upon himself to introduce the Kindle Fire HDX to the press for a hands-on demo last month, gushed about the quarter in prepared remarks:

It’s been a busy few months—we launched a new Paperwhite and new Kindle Fires to positive reviews and surprised people with the revolutionary Mayday button—average Mayday response times are just 11 seconds!

And that’s not all. In the last 90 days, our AWS team got back to work on a big government contract, we brought 8 million square feet of fulfillment center capacity online, deployed 1,382 Kiva robots in three FCs, provided a new venue for artists to reach customers, signed up millions of new Prime members, announced Kindle MatchBook, Login & Pay, and nine new original TV pilots, joined the Code.org coalition, acquired TenMarks—a company that helps kids with math, scored a win for customers who want to use Kindles on airplanes even during takeoff and landing (also, a big hat tip to Nick Bilton on that one), began hiring and training 70,000 new U.S. FC employees to help serve customers this holiday season, and saw the Kindle Million Club grow to include 14 KDP authors.

With the busiest shopping time of the year quickly approaching, Wall Street expects a rebound from Amazon during the fourth quarter. Analysts want the e-commerce titan to deliver earnings of approximately 72 cents per share on a revenue of $25.89 billion.

Amazon responded with a revenue guidance range of $23.5 billion to $26.5 billion.

Along with the holiday season and all the madness that entails, Amazon is also expected to make some major announcements surrounding its cloud services business at the company's second annual re:Invent summit in Las Vegas in November.

The Seattle-headquartered operation typically doesn't break out a lot of sales figures by department, but it didn't shy away from boasting plenty of releases across its diverse portfolio either.

Aside from the aforementioned Kindle Fire updates, here's a closer look at the highlights from Amazon's Q3:

  • Amazon Web Services was upgraded with more than a dozen new features to its relational and NoSQL database services.
  • The AWS customer base now includes more than 2,400 education institutions and 600 government agencies, including this recent addition: the U.S. Federal Drug Administration.
  • Opened the Mexico Kindle Store with more than two million titles -- hundreds of thousands of which are exclusive. More than 70,000 are in Spanish.
  • Launched Appstore Developer Select, an incentive program for developers who optimize their apps and games for Amazon's Appstore and the Android-based Fire OS for the Kindle Fire tablet series
  • Launched Login and Pay with Amazon, a new one-click payments feature for external retail sites and online merchants that goes tête–à–tête with PayPal
  • Announced it will be adding more than 70,000 full-time seasonal jobs across its U.S. fulfillment centers this holiday season -- roughly doubling the number of temp workers Amazon employed during Q4 last year

Topics: Cloud, Amazon, E-Commerce, Enterprise 2.0, Tech Industry

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11 comments
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  • Ponzi scheme

    Is Amazon a Ponzi scheme? When will they make some real profit?
    Owl`Net
    • What a coincidence!

      That's exactly what I was thinking.
      jhammackHTH
    • AMZN never made sense

      I own the stock, and can't make any sense of it.

      Does Wall Street think that the profit will come when the last brick and mortar retailer is gone? And, I'm sure there will be no competition to undercut Amazon at that point? Unlikely.

      The valuation is set like Apple or Microsoft, companies that print money, but, ultimately, Amazon is in a commodity market. Even if they have market dominance, it's going to be cut throat. They can't just jack up prices, turn on the profit spigot, on some future date, and expect the market to accept it. Apple can do that with IOS and MS with Win, but retail doesn't work like that -- there are other options.
      Tojuro
  • Good Lord!!!

    How can they continue to be a Wall Street darling when they don't make any money? That's what you get when you give away your tablets.
    jhammackHTH
  • Amazon Says Holiday Quarter Will Be A Bust!

    While analyst estimates are for Amazon to earn $.73 in the holiday quarter, Amazon's quarterly report provided guidance for the holiday quarter of earnings to be between a loss of $500 million and a gain of $500 million. The mid-point is 0, meaning no profit. Not exactly what I would call a good holiday quarter. Why the stock would move up 9% with this extremely poor guidance is beyond me. Here's a company worth over $150 billion and it can't even earn a penny a share!
    DaytonJohn
    • @ DaytonJohn

      Amazon is the only company other than Google and Yahoo (and Ebay and Bing/MSN) that has survived the dot-com boom and then bust in the 1997-2003 timeframe. New players including Facebook and Twitter are its real rivals now while not really including Google.

      Among all of the above companies, Amazon barely breaks even or makes a minor loss every quarter. While Google has a chokehold and a monopoly on mobile and desktop search and display advertising. And which Facebook looks set to share with Google very soon. The real problem for Amazon is that it lacks an advertising based business model (though that has kickstarted last year). Amazon advertising business group has to step up and deliver product ads meeting or beating Google's Adwords product ads (PLA) at some point of time. Unless that happens, Amazon's only successful new business will only be AWS.

      If Amazon steps into the enterprise cloud more and more, then that implies the margins from the enterprise cloud business will offset the warehouse and other capital expenditures on the commerce side. Amazon has already raised the minimum cost percentage to be shared with them on all Amazon site resold goods. Sellers already are complaining about this but Amazon has to pay sales taxes in different states and also has to pay for increased capital expenditures.

      All of these issues points to the fact that either Amazon will break big time into the advertising business to complete with Google PLA business or they will break a lot more into the cloud AWS business. Or a combination of both is possible but then their management's specialization may only serve them in one market. Like how Microsoft could not scale up Bing business (not yet) though it was a dominant player in every other market.

      My point is that the question on Amazon has to finally come down to its lack of advertising business to compete with Google. Amazon has similar business model issues as Microsoft. But Microsoft is actually better placed to face those issues than Amazon due to their ferocious focus on Bing inspite of its lossy nature.
      calahan
  • Amazon....

    Wall Street's charitable are to the consumer.
    Bruizer
  • And some complain about other companies making too much profit

    The best I can tell, if Amazon quit building warehouses and investing in things like AWS, they'd turn a monster profit, which is probably why investors keep buying their stock. When Apples or Walmarts profits are reported, a lot of people start howling that they're greedy. Amazon reports a small loss, they're messed up.
    Bezos seems to look way down the road. Eventually Amazon will quit building warehouses and slow down their expansion in the other areas they have, and everyone will say Bezos is so greedy for making such a huge profit.
    bluescratch
    • The problem with that line of thought is...

      All Amazon's profit are supporting existing businesses and revenue streams. If they stop building more warehouses and AWS server farms (that they record as 100% operating profit), they could not support any revenue growth and losses would be in the hundreds of millions.
      Bruizer
  • Amazon is basically operating like a government agency:

    spend more and more money, and end up with a deficits. And they're doing it the same way as the government: with other people's money. Problem for the investors is that, even if Amazon turns a profit sometime in the future, the earnings per share will still be very pitiful, and for a long time. I doubt that Amazon's investors expect earnings from profits; those investors are mostly hoping for the stock price to rise, in order to gain that way. It's the same with Facebook and Twitter: no real earnings from profits, but major gains from the stock prices rising. In that sense, those companies, including Amazon and Twitter and Facebook, are Ponzi schemes.
    adornoe
  • Meanwhile

    Amazon is in trouble for selling Holocaust denial crap, Nazi memorabilia, books about rape, etc.
    Gisabun