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Amazon Tops Wall Street Estimates: Q3 Net Profits Reach $256 Million

Amazon Tops Wall Street Estimates: Q3 Net Profits Reach $256 Million

By any measure, Amazon had a busy Q3: the retailer completed its $13.7 billion acquisition of Whole Foods, increased investments in fulfillment centers and content and kicked off its search for a second headquarters. But despite the heavy spending, Amazon still reeled in $256 million in Q3 net profits, or $0.52 per share.

This number vastly exceeds the $0.03 EPS anticipated by Thomson Reuters — and shows that even in a quarter of outlandish spending, Amazon still manages to stay profitable. On top of the income boost, the retailer also saw:

  • Net sales increased 34% to $43.7 billion;

  • Amazon Web Services (AWS) sales rose 42% to $4.58 billion;

  • The stock price rose nearly 8% in after-hours trading on Oct. 26.

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Amazon also set its guidance for Q4 net sales, projecting between $56 billion and $60.5 billion, which would bring year-over-year growth into the 28% to 38% range.

The quarterly report is exactly what Amazon needs as its pivots to the holiday season. For the second straight year, the company is investing more capital in its U.S. network of fulfillment centers, sortation centers and customer service sites, hiring more than 120,000 seasonal workers.

Amazon will control 43.5% of all U.S. online sales in 2017 (including third-party sales), up from 38% in 2016, according to data from eMarketer. Despite Walmart’s massive e-Commerce growth spurt, Amazon still holds a formidable lead in e-Commerce market share over every other public retailer. EBay comes in second at 6.8% market share, while Apple and Walmart are tied at 3.6%.

B2B Services Capitalize On $1.2 Trillion Market

Although AWS has continued to be a massive profit driver, accounting for nearly 10% of total revenue in Q3, sales growth for the cloud service actually slowed down for the eighth straight quarter. But even as more enterprises becoming willing to use more than one cloud offering at a time, AWS still leads the market for cloud infrastructure at 30% — more than double the 14% share of its closest competitor, Microsoft Azure, according to CNBC.

Amazon also is launching its Business Prime Shipping service, which offers free two-day shipping to multi-user business accounts in the U.S. and Germany. Along with AWS, Business Prime Shipping gives Amazon another service offering for the growing B2B e-Commerce market. Over the next four years, B2B e-Commerce sales are expected to grow at an annual rate of 7.4% until they reach $1.2 trillion by 2021, according to Forrester.

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