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10/29/2020

Amazon in blockbuster quarter as sales jump 37%

Marianne Wilson
Editor-in-Chief
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Amazon enters the holiday season on the heels of a blowout quarter that easily topped Street forecasts. 

The e-commerce giant reported that its net income increased to $6.3 billion, or $12.37 per diluted share, in the quarter ended Sept. 30, compared $2.1 billion, or $4.23 per diluted share, in the year-ago period. Analysts have expected earnings of $7.41 per share. Operating income increased to $6.2 billion in the third quarter, compared with operating income of $3.2 billion.

Net sales increased 37% to $96.1 billion, topping estimates of $92.7 billion. Excluding the $691 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 36% compared with last year. 

Revenue at Amazon Web Services, the company’s highly profitable cloud business, rose 29% to $11.60 billion. 

"Amazon's Q3 surpassed every expectation on the top and bottom lines, particularly considering the company pushed Prime Day into Q4 this year," said Andrew Lipsman, principal analyst, eMarketer.  "While it was clear that the pandemic-driven shift to e-commerce would keep Amazon's top-line elevated, it surprised by easily surpassing an already high bar. More importantly, profits soared on strong growth in 3rd party seller services and a big acceleration in Amazon's high-margin ad business as the digital ad market recovered."

In his statement, Amazon founder and CEO Jeff Bezos challenged retailers to increase their minimum wage. 

“Two years ago, we increased Amazon’s minimum wage to $15 for all full-time, part-time, temporary, and seasonal employees across the U.S. and challenged other large employers to do the same,” he said. “Best Buy and Target have stepped up, and we hope other large employers will also make the jump to $15. Now would be a great time.”

Amazon raised its 2020 outlook. Net sales are expected to be between $112.0 billion and $121.0 billion, or to grow between 28% and 38% compared with fourth quarter 2019.

Operating income is expected to be between $1.0 billion and $4.5 billion, compared with $3.9 billion in fourth quarter 2019. The guidance assumes approximately $4.0 billion of costs related to COVID-19.