Amazon drops on revenue and guidance miss

Amazon‘s third-quarter earnings beat Street estimates, but its revenue and fourth-quarter outlook fell short of expectations, dropping its stock roughly 6 percent in after-hour trading.

Here are the most important numbers:

  • EPS: $5.75 vs. $3.14 estimated, according to Refinitiv
  • Revenue: $56.6 billion vs. $57.10 billion estimated, according to Refinitiv
  • AWS revenue: $6.7 billion vs. $6.7 billion estimated, according to FactSet

The company gave fourth-quarter revenue guidance in the range of $66.5 billion and $72.5 billion, below street estimates of $73.79 billion. The fourth quarter is the biggest and most important sales period for Amazon because of the holidays.

Revenue increased 29 percent from last year. North American sales were $34.3 billion, up 35 percent from last year, while international sales grew just 13 percent to $15.5 billion. AWS continued to show strong growth, jumping 46 percent in sales.

Net income, however, grew more than 10-times from the year-ago period, to $2.8 billion. The $3.7 billion in operating income far-exceeded Street estimates of $2.1 billion. The widening profits are largely driven by the growth of Amazon’s high-margin businesses, including its cloud, advertising and third-party seller services.

Amazon’s “other” category, mostly comprised of its burgeoning advertising business, jumped 123 percent to $2.5 billion in revenue.

In a prepared statement, Amazon CEO Jeff Bezos highlighted the growth of Amazon Business, its marketplace for business customers.

“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries,” Bezos said in a statement.

Amazon’s quarterly report comes amid a broader market sell-off that saw other tech stocks get hammered in recent weeks. Amazon stock is up roughly 49 percent this year.

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