Amazon falls well below Q3 earnings targets; weak outlook for holiday season

A silver lining? The "Other" category that houses Amazon Web Services did see its own revenue climb.

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Amazon published third quarter earnings after the bell on Thursday, and the results won't do any good for nervous shareholders following a worse-than-expected Q2 .

The Internet giant reported a net loss of $437 million, or 95 cents per share (statement).

Losses on a non-GAAP basis also equated 95 cents per share on a revenue of $20.58 billion, up 20 percent from the same quarter last year.

Still, Wall Street was bracing for a loss of just 76 cents per share on revenue of at least $20.84 billion.

As a result, Amazon shares started to tumble in after-hours trading by initially seven percent.

Nevertheless, CEO Jeff Bezos kept the focus on the holiday fourth quarter -- traditionally Amazon's strongest -- in prepared remarks:

As we get ready for this upcoming holiday season, we are focused on making the customer experience easier and more stress-free than ever. In addition to our already low prices, we will offer more than 15,000 Lightning Deals with early access to select deals for Prime members, hundreds of millions of products across dozens of categories, curated gift lists like Holiday Toy List and Electronics Holiday Gift Guide, new features like #AmazonWishList, and a great new lineup of products like Kindle Voyage and Fire HD Kids Edition. And if you order your gifts on AmazonSmile, we’ll donate a percentage of your purchase price to your favorite charity.

However, the holiday season doesn't actually look all that bright just yet. Wall Street expects a bounce back from the e-commerce titan, projecting earnings of 69 cents per share on top of $30.91 billion in revenue.

Amazon followed up with a much softer Q4 revenue guidance range of $27.3 billion and $30.3 billion, translating to growth of seven to 18 percent from the fourth quarter of 2013.

The Seattle-headquartered corporation does not break out sales results for its cloud unit, Amazon Web Services, instead folding it in to the "Other" category with various advertising products. 

Domestically, this vertical went up and generated $1.34 billion in revenue, compared to $1.168 billion last quarter or $960 million from Q3 2013.

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Amazon did tack on a small update about AWS underneath all of the Prime, Kindle, Pay and even Xbox collaboration news. AWS experienced usage growth "close" to 90 percent year-over-year in Q3 following a routine round of price cuts back in Q2.

AWS has seen more than 350 significant service and feature releases this year, most recently including the debuts of the AWS Directory Service for managing on-premises access control and security as well as a second AWS Region in Europe, based in Frankfurt.

With its annual developer conference in Las Vegas this November, shareholders and customers alike can expect an onslaught of news from AWS within a few weeks.

Slides via Amazon Investor Relations

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