Revenue rose 29% to $56.6 billion in period
It was the second consecutive quarter of record profitability for the e-commerce company.
Operating income increased to $3.7 billion in the quarter ended September 30, compared with $347 million in third quarter of 2017, the company reported on Thursday.
Profits continue to be propelled by the company’s high-margin segments, such as Amazon Web Services, its ad business and revenue from third-party sellers. Operating income at AWS rose 77% from a year earlier to $2.1 billion on a revenue increase of 46% to $6.68 billion.
Amazon said profits also got a lift from cost cuts, including slowdowns in hiring, warehouse growth and data center capacity. The number of employees grew roughly 13% in the past 12 months compared with 38% growth in the prior year, excluding Whole Foods, Brian Olsavsky, Amazon’s chief financial officer, said during a conference call with analysts. “We’re continuing to invest in a lot of areas. We’ve also purposefully looked for areas where we can hold head count flat,” Olsavsky said.
Jeff Bezos, Amazon’s founder and chief executive officer, chose to call out the momentum of Amazon Business in the latest quarter.
“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public sector organizations in eight countries,” Bezos said. “And we’re not slowing down — Amazon Business is adding customers rapidly, including large educational institutions, local governments and more than half of the Fortune 100. These organizations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control. The team is doing a fantastic job building and innovating for customers.”
Amazon in the third quarter introduced a new brick-and-mortar retail concept, called Amazon 4-star, which opened in New York City last month and stocks items with a rating above four stars on Amazon.com, as well as best-sellers and new and trending items.
The company also accelerated the expansion of its Amazon Go cashierless convenience store concept, with the opening its second store in August. Amazon has since opened four more stores, in Seattle, Chicago and San Francisco, with plans for more on the horizon.
The company said it also plans to expand grocery pickup from Whole Foods Market through Prime Now, allowing customers to place their order via the Prime Now app and pick up their groceries in as little as 30 minutes. The service is available in more than 10 U.S. cities.
In response to Hurricanes Florence and Michael in the Untied States, the Disaster Relief by Amazon team deployed more than 30 trucks with more than 600,000 Amazon-donated disaster relief items, including bottles of water, food, supplies for children and other essentials. In addition, thousands of Amazon customers donated items and money to the American Red Cross, Feeding America and Save the Children through their Wish Lists, Amazon Pay and, for the first time, via Alexa.
Amazon noted that the third quarter saw the introduction of a new family of Echo smart speakers. The company also introduced the all-new Fire HD 8 tablet featuring an eight-inch high-definition display, a quad-core processor, a 16-gigabyte internal storage capacity and up to 10 hours of mixed-use battery life.
Olsavsky said Amazon expects a strong year-end holiday season. For the current quarter, which includes holidays, Amazon projects sales of between $66.5 billion and $72.5 billion, below the estimate of $73.9 billion expected by Wall Street analysts.