Amazon fails to meet Q3 2021 expectations, rakes in $110.8Bn in revenue

With October coming to an end, it’s time to see how companies fared in the third quarter of the year earnings. The industry wide result has been mixed this time around. While Truecaller, Microsoft, and Alphabet did well in Q3 2021, Facebook missed its revenue forecast. Now, it looks like Amazon falls into the same bucket as the newly formed Meta, after its Q3 2021 earnings showed results that fell below the estimates.

In Q3 2021, Amazon reported $110.8 billion in revenues, an increase of 15% compared to the year-ago period, but below the estimate of $111.6 billion. The company also reported a net income of $3.2 billion in the period, or $6.12 per share, below the estimate of $8.92 per share, and the largest year-over-year decline since the second quarter of 2017. Its operating income decreased to $4.9 billion in the third quarter, compared with $6.2 billion in the third quarter of 2020.

As for the fourth and final quarter of the year, Amazon expects that sales will generate amounts between $130-140 billion, representing growth between 4-12%. Its operating profit in the fourth quarter is expected to be between $0 billion and $3 billion, while Amazon expects around $4 billion in costs related to labor and inflation, as well as productivity headwinds in warehouses.

“In the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season,” said Amazon CEO Andy Jassy.

Revenue from third-party seller services rose by 18% to $24.25 billion. Sales in online stores rose 3% from a year earlier to $49.9 billion, while physical store revenue increased 13% to $4.27 billion. Revenue from Amazon services surpassed retail sales for the first time – net product sales came at $54.9 billion in Q3 2021, while revenue from Amazon Web Services, advertising, third-party seller services, and Prime subscriptions came to $55.9 billion.

In fact, Amazon Web Services performed extraordinarily well – it exceeded all estimates to clock revenue of $16.11 million, a growth of 39%, and generated $4.88 billion in operating income in the period.

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