Amazon.com AMZN delivered third-quarter 2023 earnings of 94 cents per share compared with 28 cents per share recorded in the year-ago quarter. The adjusted earnings of 85 cents per share beat the Zacks Consensus Estimate by 46.55%.
Net sales of $143.1 billion increased 12.6% year over year. The figure exceeded the Zacks Consensus Estimate by 1.1%. Excluding favorable forex of $1.4 billion, revenues increased 11%.
Product sales (44.1% of sales) increased 6.5% year over year to $63.17 billion. Service sales (55.9% of sales) rose 17.9% year over year to $79.91 billion.
Geographically, North America revenues (61.4% of sales) rose 11.5% year over year to $87.89 billion, which beat the consensus mark by 0.59%.
International revenues (22.5% of sales) increased 15.9% year over year to $32.14 billion, which beat the Zacks Consensus Estimate by 4.22%. Excluding forex, revenues increased 11%.
Amazon.com, Inc. Price, Consensus and EPS Surprise
Amazon.com, Inc. price-consensus-eps-surprise-chart | Amazon.com, Inc. Quote
Amazon Web Services (“AWS”) revenues (16.1% of sales) rose 12.3% year over year to $23.06 billion, which lagged the consensus mark by 0.55%.
This apart, strengthening relationships with third-party sellers remained a positive. In the reported quarter, sales generated by third-party seller services increased 20% on a year-over-year basis to $34.34 billion, which surpassed the Zacks Consensus Estimate by 2.98%.
Advertising services sales increased 26% year over year to $12.06 billion, which came ahead of the consensus mark by 5.44%.
AMZN experienced year-over-year growth of 6% in its physical store sales, which stood at $4.96 billion in the reported quarter. The figure lagged the consensus mark by 1.17%.
The company’s online store sales stood at $57.27 billion, up 7% year over year. This was attributed to an improvement in the online shopping activities of the customers. The figure also beat the Zacks Consensus Estimate by 0.33%.
Strength in Prime was a positive. Amazon witnessed 14% growth in its subscription services sales, which were $10.17 billion in the reported quarter. The figure beat the consensus mark by 0.46%.
During the reported quarter, Amazon hosted its biggest Prime Day event ever, with Prime members purchasing more than 375 million items worldwide and saving more than $2.5 billion on millions of deals across the Amazon store.
The company announced a new feature, Buy with Prime, in the reported quarter. The feature helps merchants grow their businesses on their own websites. Amazon announced integration with Shopify SHOP through Buy with Prime.
The Buy with Prime app for Shopify helps the latter’s merchants manage their businesses, with inventory, pricing and promotions automatically synced in one place.
Operating Details
Operating expenses were $131.9 billion, up 5.9% year over year. As a percentage of revenues, operating expenses declined 580 basis points (bps) on a year-over-year basis to 92.2%.
The cost of sales, fulfillment, technology and infrastructure, sales and marketing and general and administrative expenses increased 6.8%, 8.4% and 8.8% to $75 billion, $22.3 billion and $21.2 billion, respectively, on a year-over-year basis.
Sales and Marketing, as well as General and administrative, decreased 4.2% and 16.3% to $11.01 billion and $3.06 billion, respectively, on a year-over-year basis.
Operating income was $11.19 billion, significantly up from $2.53 billion reported in the year-ago quarter.
AWS’ operating income was $6.98 billion, up 29.1% year over year.
The North America segment reported an operating income of $4.31 billion compared with an operating loss of $412 million reported in the year-ago quarter. The International segment reported an operating loss of $95 million compared with a loss of $2.47 billion reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash and cash equivalents were $49 billion compared with $49.5 billion as of Jun 30, 2023.
Marketable securities totaled $14.6 billion as of Sep 30, up from $14.4 billion as of Jun 30.
Long-term debt was $62 billion as of Sep 30, down from $63.1 billion as of Jun 30.
In the third quarter, AMZN generated $21.22 billion of cash from operations, up from $16.5 billion in the second quarter.
On a trailing 12-month basis, operating cash flow came in at $71.65 billion. Free cash flow was $21.43 billion.
Guidance
For fourth-quarter 2023, Amazon expects net sales between $160 billion and $167 billion, which represents 7-12% year-over-year growth. The Zacks Consensus Estimate for net sales is pegged at $167.01 billion, indicating 11.93% year-over-year growth.
Management expects a favorable foreign exchange impact of 40 bps.
Operating income is anticipated to be between $7 billion and $11 billion.
Zacks Rank & Stocks to Consider
Currently, Amazon has a Zacks Rank #3 (Hold).
AMZN shares have outperformed the Zacks Retail Wholesale sector year to date. While Amazon shares have gained 42.3%, the sector has increased 7%.
Carvana CVNA and 1-800-FLOWERS.COM FLWS are a couple of better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carvana shares have surged 513.9% year to date. CVNA is set to report its third-quarter 2023 results on Nov 2.
1-800-FLOWERS.COM shares have declined 24% year to date. FLWS is set to report its third-quarter 2023 results on Nov 2.
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