Amazon delivers unexpected earnings behind new devices and services
Shares of Amazon soared Thursday after the online retailer posted earnings that far surpassed Wall Street expectations.
The company is rapidly growing. It paid nearly $14 billion this summer for organic grocer Whole Foods, announced a series of new voice-activated Echo devices, and kicked off a public hunt for a place to build its second headquarters. And Amazon said it expects sales to rise during the busy holiday-shopping season.
Amazon reported net income of $256 million, or 52 cents per share, for the three months ending Sept. 30. That easily beat the 2 cents per share analysts had expected, according to FactSet. Amazon has long been known for investing the money it makes back into its businesses, such as opening new warehouses to fulfill orders. Many seemed to expect that again.
Revenue rose 34% to $43.47 billion, beating the $41.58 billion analysts expected. The company said net sales included $1.3 billion from Whole Foods Market, which Amazon acquired Aug. 28. After taking over Whole Foods, Amazon slashed prices, added its logo on signs and set up a stand of “farm fresh” Amazon Echo voice-assistant devices by store entrances.
For the fourth quarter, the company expects revenue of $56 billion to $60.5 billion, up as much as 38% from a year earlier, and above what analysts expected. For the holiday season, it expects to hire more than 120,000 temporary workers to help pack and sort orders, the same amount it hired last year.
Amazon has been working on ways to make shopping with it so easy that shoppers don’t go elsewhere. Next month it will launch a service called Amazon Key that will let people in some markets get their packages delivered inside their front doors. It has taken up space inside some Kohl’s department stores where it sells its Echo devices or lets customers drop off Amazon returns for free.
Founder and Chief Executive Jeff Bezos touted the popularity of its devices and pointed out that it launched five new voice-activated devices in the last month. “Customers have purchased tens of millions of Alexa-enabled devices,” he said.
Its number of employees has also grown. Amazon had nearly 542,000 employees at the end of last month, about 160,000 more than it had a year earlier. Most of that increase is probably due to the Whole Foods deal, but it has also grown too big for its Seattle headquarters, where it has 40,000 employees.
It will build a second headquarters somewhere in North America, and is sorting through 238 proposals from cities and regions that want to land the promised 50,000 new jobs and construction spending of more than $5 billion. The company plans to announce a decision sometime next year.
Shares of Amazon.com Inc., which are up 30% this year, rose nearly 8% to $1,046.22 in after-hours trading.
UPDATES:
3:20 p.m.: This article has been updated with new details on Amazon’s growth.
This article was originally published at 1:35 p.m.
