Amazon posts strong Q3 results
Amazon.com’s cost to serve and speed of delivery in its stores business, its AWS growth which continued to stabilize, as well as its growth in advertising revenue, contributed to the retailer’s strong Q3 results.
Amazon's net sales increased 13% to $143.1 billion in the third quarter, compared with $127.1 billion in the same period in 2022. Excluding the $1.4 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 11% compared with third quarter 2022.
Amazon’s North America segment sales increased 11% year-over-year to $87.9 billion.
The company’s international segment sales increased 16% year-over-year to $32.1 billion, or increased 11% excluding changes in foreign exchange rates.
Amazon’s AWS segment sales increased 12% year-over-year to $23.1 billion.
The company’s operating income increased to $11.2 billion in the quarter, compared with $2.5 billion in the prior year period.
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North America segment operating income was $4.3 billion, compared with an operating loss of $.4 billion in the prior year period.
International segment operating loss was $.1 billion, compared with an operating loss of $2.5 billion in third quarter 2022.
AWS segment operating income was $7 billion, compared with operating income of $5.4 billion in the third quarter 2022.
Amazon’s net income increased to $9.9 billion in the quarter, or 94 cents per diluted share, compared with $2.9 billion, or 28 cents per diluted share, in Q3 of 2022.
The company’s third quarter 2023 net income includes a pre-tax valuation gain of $1.2 billion included in non-operating income (expense) from the common stock investment in Rivian Automotive, compared to a pre-tax valuation gain of $1.1 billion from the investment in third quarter 2022.
The retailer’s operating cash flow increased 81% to $71.7 billion for the trailing 12 months, compared with $39.7 billion for the trailing 12 months ended Sept. 30, 2022.
Free cash flow improved to an inflow of $21.4 billion for the trailing 12 months, compared with an outflow of $19.7 billion for the trailing 12 months ended Sept. 30, 2022.
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“We had a strong third quarter as our cost to serve and speed of delivery in our Stores business took another step forward, our AWS growth continued to stabilize, our Advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” said Andy Jassy, CEO of Amazon.
Jassy continued, “The benefits of moving from a single national fulfillment network in the U.S. to eight distinct regions are exceeding our optimistic expectations, and perhaps most importantly, putting us on pace to deliver the fastest delivery speeds for Prime customers in our 29-year history. The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI, where the combination of our custom AI chips, Amazon Bedrock being the easiest and most flexible way to build and deploy generative AI applications, and our coding companion (CodeWhisperer) allowing enterprises to have the equivalent of an experienced engineer who understands all of their proprietary code is driving momentum with customers, including adidas, Booking.com, GoDaddy, LexisNexis, Merck, Royal Philips, and United Airlines, all of whom are starting to run generative AI workloads on AWS. Between AWS re:Invent and our 29th holiday shopping season, this is a particularly action-packed time of year at Amazon and we’re excited for what’s to come.”
In providing its guidance for Q4, Amazon said it expects net sales to be between $160 billion and $167 billion, or to grow between 7% and 12% compared with fourth quarter 2022. This guidance anticipates a favorable impact of approximately 40 basis points from foreign exchange rates.
Operating income is expected to be between $7 billion and $11 billion, compared with $2.7 billion in the prior year period.
This guidance assumes, among other things, that no additional business acquisitions, restructurings or legal settlements are concluded.