Amazon's shares jump as quarterly profit more than triples

Company’s net income increased to $9.9bn in the September quarter on strong advertising and cloud business

Amazon's revenue during the third quarter increased 13 per cent on an annual basis to $143.1 billion. Bloomberg

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.