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October 26, 2018

Amazon’s Total Q3 Sales & Profits Rise As Its B2B Platform Tops $10 Billion

Even so, stock plunged Friday because of a disappointing forecast for the fourth quarter.

By  Christopher Ruvo

Amazon Business, the company’s B2B platform, is generating $10 billion in annualized sales and serving millions of private and public sector organizations in eight countries. For the promotional products industry, that was one of the most relevant revelations to come from Amazon’s just-released third quarter earnings. The B2B marketplace can be both a new platform promo firms can potentially leverage – and a source of competition.

“Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100,” said Jeff Bezos, Amazon founder and CEO. “These organizations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control.”

Despite soaring Q3 sales and profits in Amazon’s overall business, the Seattle-based ecommerce company’s stock plunged 10% in premarket trading on Friday to $1,600 a share – the stock’s biggest decline since an 11% plunge in January 2014.

The drop occurred because Amazon’s guidance for the fourth quarter – the biggest sales quarter because of the holidays – fell short of expectations. Amazon is forecasting Q4 revenue in the range of $66.5 billion to $72.5 billion, below consensus estimates of $73.79 billion.

Meanwhile, the company predicts that fourth quarter operating income will tally between $2.1 billion and $3.6 billion – below Wall Street expectations of $3.9 billion. Amazon this month had announced it would pay U.S. workers a minimum wage of $15 an hour. The pay hike was incorporated into Amazon’s forecast, but the financial impact was not quantified in the guidance.

Overall, Amazon increased year-over-year net sales during the third quarter of 2018 by 29% to $56.6 billion, below estimates of $57.1 billion. Net income rose dramatically, skyrocketing from $256 million, or $0.52 per diluted share, in 2017’s Q3 to $2.9 billion, or $5.75 per diluted share, in 2018’s third quarter. Also, operating income increased to $3.7 billion in the third quarter, compared with operating income of $347 million in third quarter 2017.

For the trailing twelve months ended September 30, operating cash flow rose 57% to $26.6 billion, compared with $17 billion for the trailing 12 months ended September 30, 2017. Free cash flow also increased for the 12-month period, nearly doubling year-over-year to $15.4 billion.

In addition to announcing advancements in everything from its web services business, artificial intelligence initiatives and more, Amazon said that its Amazon Fashion channel continues to expand. The apparel business segment’s development included partnering with J.Crew to launch J.Crew Mercantile on Amazon Fashion, bringing Calvin Klein’s re-launch of its new denim assortment to customers, and adding a collection from Ralph Lauren’s CHAPS brand.