Amazon rallies after operating income shines in FQ3; AWS matches expectations

Amazon (NASDAQ:AMZN) shot up in after-hours trading on Thursday after reporting operating income above expectations and setting solid guidance for the holiday quarter. The Seattle-based e-commerce giant reported total revenue in North America in FQ3 was up 9% to $95.5 billion, while international revenue was 12% higher to $35.9 billion. Total revenue was up 11% year-over-year to $158.9 billion, vs. $157.3 billion consensus.

The cloud business was strong again as AWS revenue came in at $27.5 billion to match the consensus expectation. Online stores revenue came in at $57.3 billion, vs. $59.7 billion consensus. Third-party seller services revenue rose 10% to $37.9 billion during the quarter.

Operating income was reported at $17.4 billion (+56% Y/Y) in comparison to the consensus mark of $14.7 billion and the company’s guidance range of $11.5 billion to $15.0 billion.

Free cash flow improved to an outflow of $47.7 billion for the trailing twelve months, compared to an outflow of $21.4 billion for the trailing twelve months a year ago.

CEO Andy Jassy: “We kicked off the holiday season with our biggest-ever Prime Big Deal Days and the launch of an all-new Kindle lineup that is significantly outperforming our expectations; and there’s so much more coming, from tens of millions of deals, to our NFL Black Friday game and Election Day coverage with Brian Williams on Prime Video, to over 100 new cloud infrastructure and AI capabilities that we’ll share at AWS re:Invent the week after Thanksgiving.”

Looking ahead, Amazon (AMZN) expects revenue of $181.5 billion to $188.5 billion (midpoint $185.0 billion) for the holiday quarter, vs. $186.4 billion consensus. AMZN also guided for operating income of $16.00 to $20.0B (midpoint $18.00 billion) vs. $17.5 billion consensus.

Amazon (AMZN) will hold a conference call at 5:00 p.m.

Shares of Amazon (AMZN) gained 4.2% in after-hours trading to land at $167.54. The e-commerce stock fell 3.39% during the regular session.

The report from Amazon (AMZN) could be solid enough to provide an incremental lift to Walmart (WMT), Target (TGT), Etsy (ETSY), Wayfair (W), Best Buy (BBY), and the retail sector (XRT) as a whole.