Amazon Q3 Net Sales Up 34%, Shares Soar

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Amazon earnings

Seattle, WA — Shares of Amazon.com soared past $1,000 in after-hours trading after the company released third quarter financial results showing net sales of $43.7 billion, an increase of 34% year-over-year and beating analysts’ estimates.

Net sales includes $1.3 billion from Whole Foods Market, which Amazon acquired on Aug.  28, 2017. Excluding Whole Foods Market and the $124 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 29% compared with third quarter 2016.

Operating income decreased 40% to $347 million in the third quarter, compared with operating income of $575 million in third quarter 2016. Operating income includes income of $21 million from Whole Foods Market.

Net income was $256 million in the third quarter, or $0.52 per diluted share, compared with net income of $252 million, or $0.52 per diluted share, in third quarter 2016.

“In the last month alone, we’ve launched five new Alexa-enabled devices, introduced Alexa in India, announced integration with BMW, surpassed 25,000 skills, integrated Alexa with Sonos speakers, taught Alexa to distinguish between two voices, and more. Because Alexa’s brain is in the AWS cloud, her new abilities are available to all Echo customers, not just those who buy a new device,” said Jeff Bezos, Amazon founder and CEO.

“And it’s working — customers have purchased tens of millions of Alexa-enabled devices, given Echo devices over 100,000 5-star reviews, and active customers are up more than 5x since the same time last year. With thousands of developers and hardware makers building new Alexa skills and devices, the Alexa experience will continue to get even better.”

Analysts see voice ordering as the next big wave of shopping.

As for the Whole Foods Market integration, CFO Brian Olsavsky said, “I think we’ve had busy months since we’ve joined forces, offering lower prices on a range of key grocery items in the stores, launching the Whole Foods private label products on Amazon, the technical work to make Prime the Whole Foods customer rewards program, and we’ll have that coming out in the future. We’ve added Amazon Lockers to select Whole Foods stores. So lots of activity, lots of energy and we’re really excited to show customers what’s possible when we join forces here.

“I think over time, you’ll see more cooperation and working together between AmazonFresh, Prime Now, and Whole Foods as we can explore different ways to serve the customer. So, that’s kind of the early report on Whole Foods. So far so good, and we’re thrilled to finally be working together after the summer of closing the deal.”

Olsavsky also hinted that Whole Foods can play a role in any future Amazon pharmacy business.

“I can’t confirm or deny any of the rumors related to pharmacy or anything else. I will say we do see a lot of opportunity with Whole Foods,” he said. “There will be a lot of integration, a lot of touch points and a lot of working together as we go forward. And we think we’ll be also developing new store formats and everything else just as we talked about in the past before Whole Foods.”

Whole Foods founder John Mackey suggested in a recent public forum that culture clashes were making the integration with Amazon a challenging one, requiring senior executives to schedule an offsite retreat.

Posted on WholeFoods Magazine Online, 10/26/17

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