Amazon posted stronger-than-expected earnings for Q3 2024 on Thursday (Friday AEDT), with shares rising 4% in after-hours trading.
The company reported earnings of US$1.43 per share, surpassing analysts' expectations of $1.14 per share, while revenue reached US$158.88 billion (A$241.31 billion), also beating forecasts of $157.28 billion.
These figures exceeded Amazon’s guidance for Q3, in which it had projected revenues between $154 billion and $158.5 billion, representing growth of 8% to 11% compared with Q3 2023.
Key Segment Highlights
Investors focused on Amazon's core segments. Amazon Web Services (AWS) revenue was reported at $27.45 billion, in line with expectations, while advertising came in at $14.33 billion versus $14.3 billion expected.
Amazon CFO Brian Olsavsky had cautioned in the previous quarter that an event-heavy news cycle might weigh on sales as global attention wavered, mentioning events like the Paris Olympics and an attempted assassination of former President Donald Trump in July. “Customers only have so much attention,” Olsavsky noted, calling it “a tough quarter to forecast”.
Wall Street anticipated Amazon's revenue growth to land at roughly 10%, marking the fifth consecutive quarter of expansion in the low double digits, though a slight deceleration from last year's 12.6% increase.
Earnings have grown at a faster pace, bolstered by CEO Andy Jassy's extensive cost-cutting initiatives. Since 2022, Jassy has overseen more than 27,000 layoffs and has reprioritised Amazon's focus away from less profitable projects, diverging from founder Jeff Bezos' strategy.
The company also recently shut down its rapid delivery service, Amazon Today, in line with this strategy.
Operating income for Q3 came in at $17.4 billion, a 31% year-over-year increase. In its August guidance, Amazon projected operating income to range between $11.5 billion and $15 billion.
Amazon's annual Prime Day, held in July, generated record-breaking sales, though specific figures were not disclosed.
Project Kuiper and Future Outlook
Amazon’s Project Kuiper satellite internet venture also drew attention. Amazon plans to invest over $10 billion to deploy a satellite network providing global high-speed broadband, with analysts estimating total costs could reach $20 billion.
Last October, Amazon launched two prototype satellites and has scheduled its first full-scale mission for early 2025, following delays.
Q4 Guidance
For Q4 2024, Amazon projects net sales between $181.5 billion and $188.5 billion, with a growth rate of 7% to 11% compared to Q4 2023. The forecast includes an anticipated 10 basis-point impact from foreign exchange.
Operating income is expected to range from $16 billion to $20 billion, up from $13.2 billion in Q4 2023. This guidance assumes no further business acquisitions, restructurings, or legal settlements.
Amazon is set to discuss these results with analysts on a call at 8 am AEDT (9 pm GMT).
As of 7:40 am (AEDT), Friday, November 1, Amazon Inc (AMZN) stock was trading at $194.4, showing a significant increase of 4.3% from Thursday's close of $186.4. The stock reached a day low of $180.25 and a day high of $195.61. Amazon's market cap stands at $1.96 trillion.
