- Amazon Web Services (AWS) revenue surpassed analyst expectations, growing at its fastest pace since Q1 FY 2019.
- AWS is Amazon's high-margin cloud computing business.
- Amazon said that it would likely incur billions of dollars of additional costs over the short term as it faces labor shortages, higher wage costs, supply chain issues, and increased freight and shipping costs.
|Amazon Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
Source: Predictions based on analysts' consensus from Visible Alpha
Amazon (AMZN) Financial Results: Analysis
Amazon.com, Inc. (AMZN) reported Q3 FY 2021 earnings that missed analyst consensus estimates on both the top and bottom lines. Earnings per share (EPS) fell below expectations by a significant margin and were down 50.5% compared to the year-ago quarter. Amazon's revenue also came in below analyst forecasts but was up 15.3% year over year (YOY). Amazon Web Services (AWS) revenue exceeded consensus estimates.
The company's shares fell as much as 4% in extended trading. Over the past year, Amazon's shares have provided a total return of 8.9%, well below the S&P 500's total return of 40.5%.
AMZN AWS Revenue
Amazon's AWS revenue rose 38.9% compared to the year-ago quarter, its fastest pace since the first quarter of FY 2019. AWS is Amazon's cloud computing platform. It offers developers a range of on-demand technology services, such as compute, storage, database, analytics, machine learning, and other services. These services are primarily used by start-ups, enterprises, government agencies, and academic institutions.
Amazon's AWS business generates much higher margins than its e-commerce business. In the third quarter, Amazon's global retail sales- and subscription-based business segments generated about 85% of the company's total revenue, while AWS accounted for a mere 15%. However, AWS accounted for 85% of the operating income across all of Amazon's business segments. The international sales- and subscription-based business segment reported an operating loss of $911 million during the quarter.
AMZN Labor and Supply Chain Challenges
CEO Andy Jassy said that Amazon's consumer business is likely to incur several billions of dollars of additional costs due to labor supply shortages, higher wage costs, global supply chain issues, and higher freight and shipping costs.
Amazon expects its net sales for the fourth quarter to be between $130.0 billion and $140.0 billion, or an increase of between 4% and 12% compared to the year-ago quarter. Operating income is expect to fall to somewhere between $0 and $3.0 billion.
Amazon's next earnings report (for Q4 FY 2021) is estimated to be released on Jan. 31, 2022.
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TradingView. "Price Chart: AMZN and S&P 500." Accessed Oct. 28, 2021.
Amazon.com Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 43. Accessed Oct. 28, 2021.
Amazon.com Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 65. Accessed Oct. 28, 2021.
Yahoo! Finance. "Earnings Calendar: AMZN." Accessed Oct. 28, 2021.