By Deborah Mary Sophia and Greg Bensinger
(Reuters) -Amazon.com on Thursday posted third quarter profit and sales that beat Wall Street estimates, sending shares up 4% after the closing bell which more than made up for the decline during regular trading.
Net income was $15.3 billion, up 55% from 2023’s $9.9 billion.
Amazon Web Services, the company’s cloud business, reported a 19% increase in sales to $27.5 billion, in line with estimates, according to LSEG data.
“The most notable item in Amazon’s earnings was the surprising improvement in margins,” said Gil Luria, head of technology research at D.A. Davidson. “Investors were concerned about the ability of the retail business to maintain margins and Amazon was able to actually grow margins.”
Operating margin for Amazon’s international business jumped to 3.6% in the third quarter, from 0.9% in the second quarter. North America margin ticked up to 5.9%, up from 5.6% in the previous quarter.
Three months ago, Amazon executives warned that consumers were “cautious with their spending” and seeking more inexpensive options. Amazon faces heightened competition from discount retailers such as Shein and Temu and is planning a competitor to sell a wide range of goods at bargain-basement prices sent directly from China.
Amazon’s advertising sales narrowly exceeded expectations too. The company reported those sales rose 19% to $14.3 billion thanks in part to Amazon advertising slots on shopping carts in brick-and-mortar stores and ads on its Prime Video streaming service.
The revenue rise at the leading cloud provider compares with a 33% jump at Microsoft’s Azure and a 35% surge at Google Cloud for the July-September quarter.
Amazon shares closed down 3.3% ahead of the earnings report. The shares had risen almost 23% this year, beating a nearly 20% jump in the broader market.
Seattle-based Amazon said sales in its North America segment rose 9% to $95.5 billion in the third quarter.
It reported earnings of $1.43 per share, compared with expectations of $1.14 per share.
The company reported revenue of $158.9 billion in the third quarter ended September, compared with analysts’ average estimate of $157.20 billion, according to LSEG data.
In August, Amazon said it expected revenue of between $154 billion and $158.5 billion for the third quarter.
Amazon halted a practice dating back at least 23 years of holding a separate conference call with its chief financial officer and reporters, decreasing transparency.
(Reporting by Deborah Sophia in Bengaluru; Editing by David Gregorio)
