Amazon (AMZN) is set to report Q3 results today after the close with a call to follow at 5:30pm ET.

he CapitalIQ consensus calls for a 28% yr/yr decrease in non-GAAP EPS to $8.96 from $12.37 a year ago. Revenue is expected to grow 16% yr/yr to $111.7 bln, current guidance is $106-112 bln. AMZN typically guides for revenue and operating income for the next quarter, but not EPS.

  • Operating income guidance is $2.5-6.0 bln.

  • Guidance for Q3 operating income was also below consensus.

  • AWS segment had another terrific quarter last quarter. AWS segment sales rose 37% yr/yr to $14.81 bln, an acceleration from +32% in Q1 and +28% in Q4. .

TECHS:

Amazon is known for beat-and-raise quarters, but revenue was light of consensus in Q2. Amazon blamed the top line miss on people being at home less as restrictions and lockdowns eased.

RESULTS:

Amazon misses by $2.84, reports revs in-line; guides Q4 revs below consensus, guides Q4 operating income below consensus, citing higher costs

  • Reports Q3 (Sep) earnings of $6.12 per share, $2.84 worse than the S&P Capital IQ Consensus of $8.96; revenues rose 15.3% year/year to $110.81 bln vs the $111.66 bln S&P Capital IQ Consensus.

    • Q3 operating income $4.9 bln vs $2.5-6.0 bln prior guidance and $5.60 bln consensus.

    • AWS sales rose 39% yr/yr to $16.11 bln, an acceleration from recent quarters: +37% growth in Q2 to $14.81 bln and +32% in Q1.

    • AWS operating margin reported at 30.3% vs 30.5% a year ago.

  • Co issues downside guidance for Q4, sees Q4 revs of $130-140 bln vs. $142.15 bln S&P Capital IQ Consensus. Co guides to Q4 operating income of $0-3 bln vs $7.98 bln consensus.

    • In Q4, co expects to incur several billion dollars of additional costs in its Consumer business as it manages 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. "It'll be expensive for us in the short term, but it's the right prioritization for our customers and partners."

  • "We've always said that when confronted with the choice between optimizing for short-term profits versus what's best for customers over the long term, we will choose the latter—and you can see that during every phase of this pandemic."

  • Co says it has had to make extraordinary investments across its businesses to satisfy customer needs. Co says one example is that it nearly doubled the size of its fulfillment network since the pandemic began.

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