Amazon has reported strong profit growth for the third quarter, as sales maintained double-digit growth momentum amid improvements across the business.
Net sales for the quarter ended September 30 rose 13 per cent to $180.2 billion, with North America sales up 11 per cent, international sales up 14 per cent and AWS sales up 20 per cent.
CEO Andy Jassy said strong momentum and growth continued across Amazon during the quarter, as AI drove “meaningful improvements” in every corner of the business.
“AWS is growing at a pace we haven’t seen since 2022. We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity,” Jassy added.
According to GlobalData MD Neil Saunders, the clear win for Amazon this quarter is that it has maintained the elevated momentum of the last reporting period, driven by broad advances across all parts of the business, including a 16.3 per cent increase in service revenue and a 9.6 per cent uplift in product sales.
On the bottom line, net income rose 38.2 per cent to $21.2 billion. Operating income growth was flat due to a $2.5 billion legal settlement with the FTC and severance fees associated with layoffs added to the cost line. Without these, operating income would have grown 24.6 per cent.
Saunders noted that the 30.2 per cent growth in technology and infrastructure costs showed that Amazon invested even more in areas like fulfillment and technology despite present success.
“Amazon is right to make these investments as they will help provide the company with new avenues for growth and ensure it remains competitively sharp.
“However, the balancing act is that the screws of efficiency must be tightened still further, which is partly happening through the elimination of some roles and the streamlining of the corporate hierarchy,” the analyst said.
At the retail business, growth trajectory remains strong, driven by the continued expansion of fast delivery services into more rural areas and the competitive pricing and convenience of household essentials.
“Looking more widely at the Amazon ecosystem, we maintain our view that Amazon has one of the best-balanced flywheels in the business. The increasing sophistication of the seller services are helping to drive fee revenue and push up advertising sales, at the same time as helping to maintain one of the widest possible selections for shoppers,” Saunders said.
For the fourth quarter, the company expects net sales to grow between 10 per cent and 13 per cent. Operating income is expected to be between $21.0 billion and $26.0 billion, compared with $21.2 billion in the year-ago period.
“Looking beyond the current year, Amazon still has headroom for growth,” said Saunders.
“The big opportunity, at least from the customer perspective, will be to use AI more effectively to personalize, to assist with customer journeys and decision making, and to drive efficiency savings in operations and logistics. And Amazon is well placed here,” he added.
