Amazon's $96.1B Revenue, $12.37 EPS Shatter Estimates In Strong Q3

Amazon.com AMZN reported third-quarter revenue of $96.1 billion, which beat the Street consensus of $32.7 billion. Revenue increased 37% year-over-year. Amazon reported earnings per share of $12.37, which was 67% higher than estimates of $7.41.

Operating income in the third quarter was $6.2 billion, nearly doubling the $3.2 billion reported in last year’s third quarter.

Why It’s Important: Among the highlights listed in the Amazon report were the opening of two Amazon Fresh grocery stores in California, adding “Borat 2” to Amazon Prime, introducing Luna cloud gaming, reimagining the Echo devices, introducing the Amazon Halo for health and wellness and introducing new Ring devices for the car market.

Amazon also reported continued momentum for its AWS cloud services. The company reported new commitments from Moderna MRNA, Jack in the Box and Indeed. The Moderna win could be a key win as the company is working on a COVID-19 vaccine.

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What’s Next: Amazon highlighted its Prime Day held in October, which will be part of fourth-quarter earnings. The two-day event saw $3.5 billion in sales by small and medium businesses, which was up 60% year-over-year.

Amazon expects fourth-quarter revenue to be in a range of $112 billion to $121 billion, which represents year-over-year growth of 28% to 38%.

Amazon expects fourth-quarter operating income to come in a range of $1 to $4.5 billion, compared to $3.9 billion in the prior year’s period. An estimated $4 billion in costs related to COVID-19 will hit operating income in the fourth quarter.

Benzinga’s Take: Amazon reported a strong third quarter that was well ahead of consensus and a significant improvement over the last year’s comparable period.

Guidance for the fourth quarter looks strong, ahead of estimates of $112.1 billion from the Street. The $4 billion in COVID-19 costs could be a big question on the earnings conference call.

Shares could trade higher on the strong report, initial Prime Day data and guidance going into the holiday season.

Amazon's stock closed up 2% to $3,211.11 on Thursday.