Amazon posts strong Q3 results despite ongoing pandemic costs
With the pandemic driving consumers to shop online, Amazon beat analyst expectations on Thursday with its Q3 results, though its stock price didn't see much of a bump.
Why it matters: Despite incurring what it estimates was about $2.5 billion in pandemic-related costs during the quarter, Amazon's revenue grew 37% year-over-year to $96.1 billion and its profits to $6.3 billion, up 197% year-over-year.
By the numbers:
- Earnings per share: $12.37, compared to $7.41 expected, per Refinitiv.
- Revenue: $96.1 billion, compared to $92.7 billion expected, per Refinitiv.
- Amazon Web Services: $11.6 billion in revenue, up from $9 billion a year ago.
Between the lines: Though an initial surge in consumer activity in the spring was due to customers stocking up on certain items, Amazon is still seeing heavy usage and Prime membership renewals, the company told analysts during a call about its earnings.
- It also expects to lose some online shopping to brick-and-mortar stores once more of them re-open.
Executives described the performance of Amazon Web Services as a "mixed bag."
- Long term growth will continue as businesses seek to cut overall costs by moving to the cloud.
- However, in the short term, AWS's customers are also tightening their spending, and cloud computing is one area in which they can do so.
Amazon is also seeing more customers try out its digital services like Prime Video, which also correlates to more Amazon online shopping.
As far as the billions it's spending during the pandemic, the company says the costs come in areas like onboarding new hires, social distancing, extended breaks, cleaning, supplies, and testing. It doesn't expect these to recur once the pandemic has ended.
- Pandemic-related costs are expected to rise to $4 billion next quarter, the company said.
- At the same time, Amazon told analysts it saved about $1 billion on company travel this year, as well as on dramatically decreased marketing for a portion of the year.