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Jeff Bezos, Founder and CEO of Amazon.com Inc., laughs at a discussion of the Air Force’s Air, Space and Cyber Conference in National Harbor, Maryland, USA, Wednesday, 19 September, 2018.  Amazon is expected to show another big jump in profit when it reports the third quarter results on Thursday, despite major investments before the holiday.
The increased profit is driven to a large extent by Amazon’s high-margin companies, including its clouds, advertisements and services from third parties. Investors will keep an eye on how these business units were performed during the third quarter.
“Focus is likely to continue due to Amazon’s high-margin business areas, which now operate robust margin expansion,” wrote Evercore analyst Anthony DiClemente in a
- EPS: $ 3.09 vs. 52 cents per share last year according to FactSet Consensus Calculation
- Revenues: $ 57.1 billion vs. $ 43.7 billion last year, according to FactSet consensus calculation
- AWS revenue: $ 6.7 billion compared to $ 4.6 billion last year according to FactSet consensus calculation
In the third quarter, Prime Day included one of Amazon’s biggest sales days year. Despite major glitches throughout the site, Amazon announced that this year’s Prime Day had record sales, and became the biggest shopping event in the company’s history.
It also revealed a lot of new hardware units during the quarter, including an Alexa-powered microwave and home audio system, although many of the products were not sold during the quarter. With all of the food, Amazon continued to expand its food delivery service, now available in over 60 cities.
A minimum wage increase for the hourly workers announced earlier in October will not be included in the third quarter results, as it will enter into force on November 1st. Investors will look at the fourth quarter guidance to see what kind of impact the wage increase will have on Amazon’s total business.
Here are some of the most important topics that may be discussed during the winning call:
- High margin companies: Amazon sees higher contributions from its high-end companies, such as its clouds, advertising and third party sales services, helping to to increase profitability to record levels. Investors are particularly interested in Amazon advertising, which some estimate to be in line with $ 10 billion in annual earnings.
- Fourth quarter forecast: Fourth quarter is Amazon’s largest sales period due to the holiday season. However, the very important quarter saw a lower income forecast due to the minimum wage increase announced this month, as well as a change in the accounting rule likely to reduce Prime Sales.
- Physical Stores: Amazon has doubled down on its physical store expansion in recent months, opened several treasured Go Stores and the first 4-star store. The third quarter also marks the first full year since Whole Food’s operations have been included in the company’s earnings. Amazon now breaks out the sale of physical stores, but most of it almost comes from Whole Foods.
On Wednesday, Amazon’s shares lost almost 6 percent in the midst of a wide market sales under normal trading but recovered about 1.5 percent after hours after solid performance reports from tech bellwether Microsoft and technically centered automaker Tesla.