Amazon Earnings Could Produce First $100B Quarter

Amazon reports earnings on Thursday (Oct. 29) and it has an impossible act to follow. With its Q2 earnings reaping every benefit of the pandemic-driven digital-first economy, it set a new standard for exploding past earnings estimates with revenue up 40 percent to $88.9 billion. While it’s a safe bet that Amazon will beat estimates, it won’t come close to the Q2 performance. But as the retail world waits to see what is expected to be a record-setting quarter for Amazon, there are some key indicators to watch.

First, the company has already level set expectations when it said in July that it expects Q3 net sales to come in at between $87 billion and $93 billion, which would be a year-over-year growth rate of between 24 to 33 percent. Some of that growth will come from Amazon Web Services and advertising revenue. On the retail side, however, expect that Amazon will stress its commitment to its third-party sellers, which received a $3.5 billion bounce from Prime Day. Even in Q2 Amazon indicated more support for those sellers and that should be a big part of the retail segment of its business.

“We are thrilled that Prime Day was a record-breaking event for small and medium businesses worldwide, with sales surpassing $3.5 billion — an increase of nearly 60% from last year,” said Jeff Wilke, CEO of Amazon’s worldwide consumer business. “We’re also proud that Prime members saved more than $1.4 billion, and we look forward to providing more opportunities for our selling partners to grow and customers to save throughout the holiday season. I’m incredibly thankful to our employees and partners around the world who helped make Prime Day possible, especially the dedicated front-line teams in our fulfillment centers and delivery operations.”

“Shares of Amazon have moved 5% higher this week as investors anticipate not only strong numbers from Prime Day, but also better-than-expected results for the Q3,” said Nasdaq.com. “The e-commerce giant is executing at near perfection evidenced by the 40% rise in total net revenue in the second quarter. The company is benefiting from a combination of factors. Aside from the strong demand acceleration caused by the pandemic, Amazon continues to be effective in its strategy not only to grow its Prime members, but also getting them to spend more during each transaction. And there is tons of evidence to suggests that its market share gains are here to stay, beyond the pandemic. As such, while some investors might be concerned about near-term margin pressure, it would be a mistake to part with this long-term winner.”

Other analysts expect the company to beat expectations and possibly post its first $100 billion quarter in its history. Still others are looking past the Q3 announcement and ahead to Q4.

“Investors will want to look at the company’s forecast for the fourth quarter,” said The Motley Fool. “Shoppers are already flocking to Amazon, and the increase in demand during the holiday season could multiply that even further. Not only will it be important to hear what management has to say about demand, it will also be crucial to know if the company can ramp up enough to meet that demand. Companies ranging from Best Buy to Target have indicated they will start promotions earlier this year to help alleviate crowds during the holiday shopping season.”