Amazon Q3 results fall short of Wall Street expectations

The company has reported a $2.9 billion profit for the three months ending in September


MUMBAI: E-commerce giant Amazon could not beat Wall Street expectation with its revenue and fourth quarter guidance in its third quarter earnings despite turning in a record profit. The company has reported a $2.9 billion profit for the three months ending in September topping $1 billion for the fourth consecutive quarter. Revenues of $56.58 billion fell short of expectations for $57.1 billion as well as guided revenue of $66.5 billion to $72.5 billion for next quarter.

Its high margin business including cloud, advertising and third-party seller services propelled the growth of its profit more than its core retail business. Its cloud business by revenue saw sales up 45.7 per cent to $6.68 billion. On the other hand, its advertising business, jumped 123 per cent to $2.5 billion in revenue.

“Net sales increased 29 per cent to $56.6 billion in the third quarter, compared with $43.7 billion in third quarter 2017. Excluding the $260 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 30 per cent compared with third quarter 2017,” the company said in a release.

For the fourth quarter guiding too, Amazon has anticipated an unfavorable impact of approximately 80 basis points from foreign exchange rates. But this quarter is most important for the company’s sales due to the holiday season.

While total revenue increased 29 per cent from last year, a considerable trait has to be discussed. Though in its home market its growth was at high speed, in international markets that was lower. North American sales were $34.3 billion, up 35 per cent from last year but international sales grew just 13 per cent to $15.5 billion. The disappointing international result indicates that competition in e-commerce space is escalating.

“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organisations in eight countries,” said Amazon founder and CEO Jeff Bezos especially mentioned this segment.

“Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100. These organisations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control. The team is doing a fantastic job building and innovating for customers,” he added.

Though Prime Video is a part of its attempt to turn customers for shopping by engaging through the video content, it has become a major competitor of streaming giant Netflix. “Prime Video continues to announce original series debuting in 2018, including: Homecoming, a psychological thriller starring Julia Roberts, and produced and directed by Sam Esmail; as well as season 2 of The Marvelous Mrs. Maisel, recent winner of eight Emmy awards including Outstanding Comedy Series,” the company added.

Amazon is also launching monthly Prime membership in Canada and Mexico, quarterly Prime membership in China, and monthly Prime Student membership in Germany.

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