Amazon (AMZN) crushed Q3 estimates with better-than-expected net sales, profits, and subscription revenues, and more importantly, a beat on the company’s AWS, all of which offset compressed margins and launched shares sharply higher in after-hours trading.
The e-commerce giant earned a profit of $1.95 per share, up 16% year-over-year and $0.37 better than expected.
Led by gains in online stores, physical stores and subscription services, along with a 20% year-over-year gain in AWS net sales, total sales were up 13% to $180.2B, nearly $3B above estimates.
The cloud business achieved another strong quarter with sales reaching $33.01B, up 20% from the same quarter last year and up 7% from the previous quarter. The ad services business, Amazon’s (AMZN) fastest growing segment, posted revenue of $17.7B versus estimates of $17.34B.
Within its retail sector, online store revenue increased nearly 10% to $67.41B, beating $66.93B, while third party seller services net sales increased 12% to $42.5B versus $42.05B expectations.
North American sales were up 11% to $106.27B, above $104.96B estimates, while international sales were up 14%, slightly better than $40.77B estimates.
Operating income was the only soft spot in the report, roughly unchanged from a year ago at $17.42B and missing estimates by a wide margin. Correspondingly, Amazon’s (AMZN) operating margin was down 130 basis points to 9.7%, below 11.1% estimates. North American segment operating margin was down 140 basis points to 4.5%, while international segment operating margin narrowed 70 basis points to 9.7%, both of which missed expectations.
The better-than-expected results launched Amazon (AMZN) shares more than 10% higher in after-hours trading.
Related tickers: Walmart (WMT), Target (TGT), Wayfair (W), Best Buy (BBY), Etsy (ETSY), eBay (EBAY), SPDR S&P Retail ETF (XRT)