Amazon.com Inc. (NASDAQ: AMZN) reported its third quarter financial results after market close on Thursday. Despite topping analysts’ estimates in earnings, shares plunged by 9% after the Company provided a weaker-than-expected guidance.
For the third quarter, Amazon reported revenue of USD 56.6 Billion, increasing 29% year over year, but missing analysts’ estimates of USD 57.1 Billion. The Company reported an earnings per share of USD 5.75, increasing from USD 52 cents last year and topping analysts’ estimates of USD 3.14.
Amazon Web Service (AWS) reported stronger revenue growth of USD 6.67 Billion, increasing by 46% from USD 4.58 Billion the same quarter last year. AWS revenue fell short of analysts’ estimates of USD 6.71 Billion.
North American sales drove in USD 34.34 Billion, increasing by 35% from USD 25.44 Billion the same quarter last year. International sales also increased by 13% from USD 13.71 Billion to USD 15.54 Billion in the third quarter.
Amazon saw its online store sales lag behind compared to previous quarters, as net sales were USD 29.06 Billion, increasing 10% year over year. Physical stores reported revenue of USD 4.24 Billion. Third-party seller services increased by 31% to USD 10.39 Billion.
Subscription services also grew, increasing by 52% to USD 3.69 Billion. Amazon’s ‘other’ services reported revenue of USD 2.5 Billion, increasing 123% year over year. Amazon’s ‘other’ segment is mainly comprised of its advertising services.
While Amazon reported stronger growth across its segments, especially its AWS and advertising business, the weaker-than-expected results concern investors and analysts for the upcoming holiday season.
Amazon highlights its AWS and advertising segment because they are more profitable compared to its online store sales.
For the fourth quarter, Amazon forecasts revenue to between USD 66.5 Billion and USD 72.5 Billion, growing 10% to 20% year over year. Operating income is expected to be in the range of USD 2.1 Billion and USD 3.6 Billion, remaining flat at the lower end year over year. Analysts are forecasting operating income of USD 3.9 Billion.