Though Amazon.com’s inventory soared after the corporate reported earnings in July, shares have greater than given again their beneficial properties since, damage by a market selloff and up to date promoting stress within the shares of tech giants.Bulls are hoping Amazon (AMZN) will as soon as extra shock to the upside on Thursday afternoon. Among analysts polled by FactSet, the consensus is for the e-commerce and cloud large to report third-quarter income of $127.39 billion (up 15% yearly) and GAAP EPS of $0.22 (down 29%).Amazon gives quarterly gross sales and working revenue steerage in its experiences. For the seasonally massive fourth quarter, the corporate’s income consensus stands at $155.09 billion (up 13%) whereas its GAAP working revenue consensus stands at $5.05 billion (up 46%).Eric Jhonsa, Real Money’s tech columnist, shall be live-blogging Amazon’s report, which is anticipated after the bell on Thursday, together with an earnings name scheduled for five:30 P.M. Eastern Time.Please refresh your browser for updates.6:16 PM ET: Amazon’s name has ended. Shares are down 12% after-hours to $97.65 after Amazon posted Q3 gross sales and op. revenue numbers that had been just a little beneath consensus estimates and (extra importantly) issued below-consensus This fall gross sales and op. revenue steerage, with income steerage of $140B-$148B falling in need of a $155.09B consensus.Also apparently weighing on shares: AWS income of $20.54B fell in need of a $21.2B consensus, with Y/Y development slowing to 27% from Q2’s 33%.On the decision, CFO Brian Olsavsky famous some AWS shoppers are desirous to optimize their cloud spend within the present surroundings, that macro pressures (notably in worldwide markets) and foreign exchange are each headwinds for Amazon’s retail ops, and that enormous AWS investments and excessive wage/vitality inflation are margin headwinds. He forecast Amazon’s capex could be roughly flat this yr at ~$60B, with achievement and transportation capex falling by ~$10B and AWS capex rising by an analogous quantity.A few shiny spots: Amazon’s gross margin (benefiting from a continued combine shift from product gross sales to providers) got here in at 44.7%, up 140 bps Y/Y and just a little higher than anticipated, and the AWS contract backlog rose 57% Y/Y to $104.3B.Thanks for becoming a member of us.6:05 PM ET: A query about how rapidly Amazon can get again to historic North America phase working margins. And one about AWS’ development trajectory.Olsavsky says Amazon was aiming for $1.5B in operational price enhancements in Q3, however ended up with $1B. Notes Prime Day and excessive inventories had been headwinds. “My message is that we have now work to do in 2023 that we’re conscious of and dealing on at this time,” he says.Regarding AWS development, Fildes simply says the mid-20s AWS development fee Amazon noticed exiting Q3 knowledgeable its This fall gross sales steerage.6:02 PM ET: A query about vacation season demand. And one about price cuts.Olsavsky says Amazon is well-positioned to fulfill vacation season demand. Adds that Amazon is optimistic however lifelike about vacation season gross sales, given macro pressures. Says there are a selection of outcomes the corporate is getting ready for.Regarding prices, he says Amazon made good strides with productiveness, however has extra work to do. Also says Amazon is trying to acquire extra fixed-cost leverage with achievement/transportation capex. Notes inflation stays a wild card.5:58 PM ET: Another query about AWS demand. Also one about AWS backlog.Fildes says AWS backlog rose 57% Y/Y in Q3 to $104.3B (that is effectively above income development of 27%). Olsavsky suggests monetary providers shoppers had been notably trying to optimize their AWS spend, and notes AWS gives a wide range of methods to try this. Adds that this flexibility is a promoting level in a more durable macro surroundings.5:54 PM ET: A query about AWS margins and International losses being worse than anticipated.Olsavsky says AWS margins will fluctuate as Amazon makes investments and renegotiates offers. Also notes wage inflation and better vitality prices are headwinds for AWS’ earnings.For International, he notes larger vitality prices in Europe had been a margin headwind, as had been larger machine gross sales.5:51 PM ET: A query about Amazon’s plans for bettering free money circulation.Olsavsky says Amazon nonetheless has work to do to enhance its operational price construction. Also suggests Amazon has elevated product inventories in some areas that may ultimately be pared, and that it is working to enhance capex effectivity. 5:48 PM ET: First query is in regards to the This fall income information, and the impression of AWS price optimization and U.S. shopper spending.Olsavsky says foreign exchange will nonetheless be the largest headwind in This fall. Notes foreign exchange is a slight tailwind for op. revenue on account of decrease worldwide prices. Indicates Amazon’s e-commerce ops noticed an even bigger slowdown in worldwide markets than within the U.S., and highlights Europe as a spot the place macro has turn into a significant headwind.Regarding AWS, he says clients are on the lookout for methods to chop prices. Notes development continues to be robust on an absolute foundation. Indicates that whereas AWS noticed 28% fixed forex development for the entire of Q3, development has slowed to the mid-20s vary.5:44 PM ET: The Q&A session is beginning.5:43 PM ET: Olsavsky says Amazon expects to spend ~$60B on capex in 2022, broadly in-line with what it spent in 2021. Fulfillment/logistics capex is now anticipated to say no by ~$10B, whereas AWS capex is anticipated to rise by an analogous quantity.He provides macro situations have weighed on Amazon’s gross sales development, and that the corporate noticed moderating development for a lot of companies and higher foreign exchange headwinds as Q3 progressed. Says Amazon has paused hiring at minimize prices for sure companies.5:40 PM ET: Olsavsky says Amazon generated $1B in operational price enhancements in Q3, however provides it was rather less than what Amazon deliberate for. Says Amazon has recognized areas for enchancment.Also notes Amazon noticed an uptick in Prime video advertising and marketing prices, and that the corporate is making giant AWS-related investments.5:37 PM ET: Olsavsky talks up third-party vendor quantity development and the July Prime Day occasion. He additionally says AWS “has seen an uptick” within the variety of clients trying to management prices (this echoes what Microsoft mentioned this week about Azure clients).5:34 PM ET: Olsavsky notes foreign exchange damage Q3 income by $900M greater than what Amazon anticipated when it guided in July.5:33 PM ET: Olsavsky is speaking. 5:31 PM ET: The name is beginning. In current quarters, Amazon’s name has featured ready remarks from CFO Brian Olsavsky, after which Olsavsky and IR chief Dave Fildes take questions from analysts.5:26 PM ET: Hi, I’m again to cowl Amazon’s earnings name, which ought to begin in a couple of minutes.Shares have pared their losses just a little extra: They’re now down 12.4% AH.5:03 PM ET: I’m taking a brief break, however shall be again to cowl Amazon’s name, which begins at 5:30 PM ET.Shares are down 17% AH to $92.08 after Amazon posted combined Q3 outcomes (income barely missed, whereas EPS beat with the assistance of a Rivian accounting achieve), issued below-consensus This fall gross sales and working revenue steerage, and disclosed AWS’ Y/Y income development slowed to 27% from Q2’s 33%.5:00 PM ET: Amazon ended Q3 with $58.7B in money/equivalents and $58.9B in debt. Unlike in Q1 and Q2, no inventory was repurchased in Q3.The unearned income stability, which incorporates Prime charges and AWS income Amazon has collected however not but acknowledged as income, totaled $12.63B on the finish of Q3, up from $10.97B a yr in the past.4:55 PM ET: Amazon has pared its losses a bit: Shares at the moment are down 15% AH. And Apple is now near unchanged.4:54 PM ET: Amazon’s capex development has slowed, however spending continues to be excessive in absolute phrases. Purchases of property and gear totaled $16.38B in Q3, up barely from $15.72B in Q2 and $15.75B a yr in the past.CFO Brian Olsavsky mentioned on the Q2 name that Amazon’s whole capex would develop barely in 2022, with achievement/logistics capex declining and AWS capex rising.4:49 PM ET: Amazon’s Q3 bills:Shipping prices +10% Y/Y to $19.94BFulfillment +11% to $20.58BTechnology and content material +36% to $19.49BSales and advertising and marketing +37% to $11.01BG&A +42% to $3.06BThe tech/content material and gross sales/advertising and marketing figures are what actually stand out right here. While Amazon has slowed its achievement/logistics spending tempo, the corporate is clearly nonetheless investing aggressively in R&D, gross sales and content material (additionally, the closing of the MGM deal earlier this yr offered a lift to content material spend).4:38 PM ET: Amazon is now down 20% after-hours. Together with Apple’s 4.7% AH drop, this has led the Invesco QQQ Trust to drop 1.7% AH.4:36 PM ET: Amazon’s Q3 GAAP gross margin was 44.7%. That down from 45.2% in Q2, however up from 43.3% a yr in the past and just a little above a 44.2% consensus.The margin tailwind from Amazon’s ongoing combine shift in the direction of providers income streams (vendor providers, subscriptions, adverts, AWS) is offsetting the headwind from excessive depreciation bills associated to heavy capex.4:32 PM ET: With vendor providers comfortably outgrowing on-line shops, 58% of Amazon’s paid unit gross sales got here from third-party sellers. That’s up from 56% a yr in the past and represents a brand new excessive.4:28 PM ET: Q3 gross sales by enterprise:Online shops (direct e-commerce) +7% Y/Y to $53.49B, beneath a $54.28B consensusPhysical shops (dominated by Whole Foods) +10% to $4.69B, barely beneath a $4.71B consensusThird-party vendor providers (commissions, achievement, and so forth.) +18% to $28.67B, above a $27.93B consensusSubscription providers (Prime charges, content material subscriptions, and so forth.) +9% to $8.9B, beneath a $9.09B consensusAds +25% to $9.55B, barely above a $9.48B consensus”Other” income (bank cards, content material licensing, and so forth.) +163% to $1.26B, above an $843M consensus4:22 PM ET: Andy Jassy on Amazon’s spending plans: “We’re additionally inspired by the regular progress we’re making on reducing prices in our shops achievement community, and have a set of initiatives that we’re methodically working by that we consider will yield a stronger price construction for the enterprise transferring ahead. There is clearly lots taking place within the macroeconomic surroundings, and we’ll stability our investments to be extra streamlined with out compromising our key long-term, strategic bets. What received’t change is our maniacal give attention to the client expertise, and we really feel assured that we’re able to ship an excellent expertise for purchasers this vacation procuring season.”4:20 PM ET: Amazon’s whole GAAP prices/bills rose 18% Y/Y in Q3 to $124.58B, outpacing income development of 15%. That compares with 12% development in Q2.4:17 PM ET: Amazon continues to be down 18.9% AH. Shares are at their lowest ranges since March 2020.4:16 PM ET: Whereas Amazon’s headcount fell by 99K Q/Q in Q2, it rose by 21K in Q3 to 1,544,000. Annually, headcount was up 5%.4:13 PM ET: Amazon notes foreign exchange had a $5B impression on Q3 income. Revenue rose 15% Y/Y in {dollars} and 19% in fixed forex.For This fall, Amazon says its gross sales steerage assumes foreign exchange shall be a 460 bps headwind.4:10 PM ET: Q3 income by phase:North America +20% Y/Y to $78.84B, above a $77.24B consensusInternational -5% to $27.72B (+12% exc. foreign exchange), beneath a $29.00B consensusAWS +27% to $20.54B, beneath a $21.20B consensusAlong with the This fall information, the AWS miss is probably going weighing on Amazon’s shares.4:06 PM ET: Q3 op. revenue, which excludes the impression of the Rivian stake, was $2.53B, beneath a $2.95B consensus albeit in-line with steerage of $0 to $3.5B.4:04 PM ET: This fall op. revenue steerage of $0 to $4B is beneath a $5.05B consensus.4:03 PM ET: Importantly, Amazon guides for This fall income of $140B-$148B, beneath a $155.09B consensus.Shares are down 19.9% AH.4:02 PM ET: Results are out. Q3 income of $127.1B barely misses a $127.39B consensus. GAAP EPS of $0.28 beats a $0.22 consensus, however features a $1.1B achieve associated to the valuing of Amazon’s stake in Rivian.4:00 PM ET: Amazon closed down 4.1%. The Q3 report must be out shortly.3:58 PM ET: Along with its top-line numbers, Amazon’s opex and margin figures will get shut consideration. Many buyers are on the lookout for indicators of significant cost-cutting, following two years of large warehouse/logistics capability growth.3:54 PM ET: Amazon’s inventory is down 34% YTD going into earnings, and has offered off this week amid a broader rout within the shares of tech giants. That would possibly spell comparatively low expectations heading into the report.3:51 PM ET: The FactSet consensus is for Amazon to report Q3 income of $127.39B and GAAP EPS of $0.22.This fall gross sales and op. revenue steerage might need an even bigger impression on how Amazon strikes post-earnings, given This fall’s seasonal significance. The This fall income consensus is at $155.09B, and the op. revenue consensus is at $5.05B.3:47 PM ET: Hi, that is Eric Jhonsa. I’ll be live-blogging Amazon’s earnings report and name.
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