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Amazon reports better-than-expected results, as revenue jumps 13%

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Here are the results:

Earnings per share: 94 cents vs. 58 cents expected by LSEG, formerly known as Refinitiv.Revenue: $143.1 billionvs. $141.4 billion expected by LSEG.

Investors are also following these segment numbers:

Amazon Web Services: $23.1 billion vs. $23.2 billion in expected revenue, according to StreetAccountAdvertising: $12.1 billion vs. $11.6 billion in expected revenue, according to StreetAccount

Amazon said fourth-quarter sales, which include the key holiday period, will be between $160 billion and $167 billion. Analysts were expecting revenue of $166.6 billion, according to LSEG. At the mid-point of its guidance range, revenue of $163.5 billion would represent growth of 9.6% from $149.2 billion a year earlier.

Revenue jumped 13% in the third quarter, a sign that the business is seeing some acceleration after a difficult 2022 that was marred by soaring inflation and rising interest rates.

Amazon has been in cost-cutting mode for the past year as it became clear that it expanded too quickly during the pandemic. The company has laid off 27,000 employees since last fall, and it’s axed some of its more unprofitable bets.

CEO Andy Jassy, who succeeded founder Jeff Bezos at the helm in mid-2021, said those belt-tightening efforts continue to bear fruit.

“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 stabilize, our Advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” Jassy said in a statement.

Sales in Amazon’s core e-commerce business continued to recover, expanding 7% year over year, after growing 4% in the previous quarter. The September quarter includes the results of this year’s Prime Day promotion, which took place in July. Amazon described it as its “biggest ever” sale.

Net income more than tripled to $9.9 billion, or 94 cents a share, from $2.9 billion, or 28 cents a share, a year earlier. Net income for the quarter includes pre-tax valuation gain of $1.2 billion from the company’s investment in electric car company Rivian

Amazon’s results follow better-than-expected numbers from AlphabetMeta

Amazon shares fell more than 6% over the past two trading days, as the response to Alphabet and Meta’s numbers hit their mega-cap tech peers.

Digital advertising continues to be a bright spot for Amazon, as third-party sellers and large brands bolster their ad spending to improve visibility in an increasingly competitive marketplace. Ad revenue soared 26% from a year earlier. That’s much faster than Google’s ad growth, which was 9%, and topped Facebook’s ad growth of 23%. Snap

In cloud, however, Amazon appears to be giving up some market share. Amazon Web Services, which leads Microsoft

Growth at AWS has slowed in recent quarters as big businesses looked to reel in spending. Chief Financial Officer Brian Olsavsky told reporters on a call after the results that the company continues to see some “cost optimization” from customers, albeit at a slower rate than before.

“There’s still companies that are joining that effort but it’s slowing down and we’re starting to see more and more new workloads come up,” Olsavsky said.

He also noted the company is taking a lot of costs out of the business. That includes expenses tied to fulfillment, delivery and the handling of inventory.

Amazon’s cost cutting is showing up in its profit margin. The company reported an operating margin, the profit left after accounting for costs of core operations, of 7.8%, the highest since early 2021.

On a conference call with analysts, Jassy spoke optimistically about the outlook for AWS and said the cloud unit is seeing “the pace and volume of closed deals pick up.” He said several deals were signed in September that will show up in the fourth quarter.

WATCH: The market now sees Amazon as more of a cloud and generative AI company

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