Amazon Q3 Earnings Analysis: Revenue Growth and Margin Improvement
๐ 13% Surge After EarningsโWhat Happened?
Amazon's stock surged approximately 13% after releasing Q3 earnings. This added roughly $300 billion in market cap in a single day. What kind of results triggered such a reaction?
๐ฐ Revenue: Exceeding Expectations
Key Figures
- Revenue: $180 billion (13-14% YoY growth)
- vs. Analyst Estimates: +$3 billion
- vs. Company Guidance: +$3 billion (midpoint)
Amazon beat both analyst expectations and its own guidance.
๐ Profits: The Truth Behind the Numbers
Surface-Level Numbers
- EPS: $1.95 (5% YoY growth)
- Operating Income: $17.4 billion (below $18 billion guidance)
At first glance, this seems disappointing, but there's a special circumstance.
$4.3 Billion in One-Time Charges
This quarter included two major one-time expenses:
- Restructuring Severance: Related to workforce reductions
- Legal Settlement: Related to a specific lawsuit
Excluding these, actual operating income was $21.7 billion, significantly beating guidance.
๐ Margins: Continuous Improvement Trend
Gross Margin
- 1.8 percentage point improvement
- On $180 billion revenue, 1.8pp means $3.2 billion in additional profit
This is a strong signal that Amazon is improving cost efficiency.
Operating Margin
Excluding one-time costs, it would have risen to 12%. This shows Amazon's profitability is steadily improving.
๐ต Balance Sheet: Solid Foundation
| Item | Amount |
|---|---|
| Cash & Cash Equivalents | $94 billion |
| Total Debt | $51 billion |
| Net Cash | $43 billion |
Amazon holds $43 billion in net cash, providing ample capacity for future investments and weathering difficult times.
๐ฏ Key Takeaways
- Sustained Revenue Growth: 13-14% growth is impressive for a company this size
- Margin Improvement Underway: 1.8pp gross margin improvement is a key signal
- Consider One-Time Costs: Surface numbers distort the true picture
- Excellent Financial Health: Solid foundation with $43 billion net cash
In the next article, we'll examine the explosive growth of AWS, the core engine of Amazon's profits!
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