Amazon’s shares jumped about 5 per cent in extended trading on Thursday after the company reported a more than threefold surge in its third-quarter net profit, driven by a rise in its advertising and cloud businesses.
Its net income increased to $9.9 billion in the third quarter, or $0.94 a share, compared with $2.9 billion, or $0.28 a share, in third quarter of last year.
The July-September net profit also included a pre-tax valuation gain of $1.2 billion included in non-operating income from the common stock investment in electric vehicle maker Rivian Automotive, the company said on Thursday.
That compared to a pre-tax valuation gain of $1.1 billion from the investment in the third quarter of last year.
The Seattle-based company’s revenue during the third quarter increased 13 per cent on an annual basis to $143.1 billion, topping analysts' average estimate of $141.4 billion.
This was the 12th consecutive quarter with more than $100 billion in sales.
“We had a strong third quarter as our cost to serve and speed of delivery in our stores business took another step forward, our AWS growth continued to stabilise, our advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” said Andy Jassy, Amazon chief executive.
Amazon’s operating income increased to $11.2 billion in the third quarter, up from $2.5 billion during the same period in 2022.
The company's stock, which is up about 39 per cent since the start of this year, was nearly 1.50 per cent down at $119.57 at the close of trading on Thursday.
It surged to $122.85 a share in after-hours trading, although the gains were later erased.
Last year, Amazon’s share price dropped more than 50 per cent. It was the biggest decline since 2000, when it tumbled almost 80 per cent.
North American market sales, which increased almost 11.4 per cent year on year to more than $87.8 billion in the September quarter, contributed more than 61 per cent to the overall sales of the company.
But the international markets sales surged almost 16 per cent annually to over $32.1 billion. They added more than 22.4 per cent to overall sales.
Amazon Web Services, the company’s subsidiary that provides on-demand cloud computing platforms to other businesses, also had good momentum in sales.
AWS revenue reached $23.1 billion in the third quarter, missing analysts’ expectations of $23.2 billion, and rising annually by more than 12.2 per cent.
"Amazon blew past both revenue and earnings per share expectations this quarter, thanks to a strong performance in its key AWS cloud business as well as several cost-saving measures implemented during recent months,” Jesse Cohen, senior analyst at Investing.com, told The National.
"The bottom line is that despite all the concerns plaguing the tech sector, Amazon has managed to perform surprisingly well.
"Amazon's strong guidance for the all-important holiday quarter is another indicator that the company may be starting to come out of the woods."
The company earned $12.1 billion from advertising in the previous quarter, up 26 per cent, compared to $11.6 billion expectations, according to StreetAccount.
In its fourth-quarter sales guidance, Amazon expects revenue to hover between $160 billion and $167 billion, jumping 7 per cent to 12 per cent compared with the same period a year earlier.
Operating income is expected to be between $7 billion and $11 billion, compared with $2.7 billion in the fourth quarter of last year.
The company’s revenue during the second quarter increased 11 per cent on an annual basis to $134.4 billion, topping analysts' average estimate of $131.5 billion, Refinitiv reported.
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What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
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Warn others to prevent further harm
Courtesy: Crystal Intelligence
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Read more about the coronavirus
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
RESULT
Bayern Munich 5 Eintrracht Frankfurt 2
Bayern: Goretzka (17'), Müller (41'), Lewandowski (46'), Davies (61'), Hinteregger (74' og)
Frankfurt: Hinteregger (52', 55')
Match info
Uefa Champions League Group B
Tottenham Hotspur 1 (Eriksen 80')
Inter Milan 0
Company name: Play:Date
Launched: March 2017 on UAE Mother’s Day
Founder: Shamim Kassibawi
Based: Dubai with operations in the UAE and US
Sector: Tech
Size: 20 employees
Stage of funding: Seed
Investors: Three founders (two silent co-founders) and one venture capital fund
Leaderboard
15 under: Paul Casey (ENG)
-14: Robert MacIntyre (SCO)
-13 Brandon Stone (SA)
-10 Laurie Canter (ENG) , Sergio Garcia (ESP)
-9 Kalle Samooja (FIN)
-8 Thomas Detry (BEL), Justin Harding (SA), Justin Rose (ENG)
Polarised public
31% in UK say BBC is biased to left-wing views
19% in UK say BBC is biased to right-wing views
19% in UK say BBC is not biased at all
Source: YouGov
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
THE SPECS
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Price, base: from D215,000 (Dh230,000 as tested)
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