Amazon blasts past estimates, triples profits to $6.2bn but says COVID will cost it $4bn over the next quarter

Bezos predicts a very Merry Christmas

Amazon on Thursday reported $96.1bn in revenue for its third quarter of 2020, a 37 per cent increase year-on-year that demonstrated its continued resistance to pandemic-induced economic malaise.

Despite beating the expectations of financial analysts by quite a bit – the average revenue estimate was $92.7bn – after-hours trading same Amazon's stock price trending downward, perhaps due to the uncertainty entailed by its financial guidance – sales revenues of $112bn to $121bn – for its upcoming holiday fourth quarter.

CEO Jeff Bezos in a statement [PDF] offered an optimistic assessment of the company's prospects. "We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season," he said.

Bezos, whose net worth surpassed $200bn in August, also celebrated his company's decision two years ago to offer a minimum wage to all employees of at least $15 an hour and reiterated his challenge to other large employers to do the same.

Nonetheless, the company for years has been characterized in multiple media reports as a "sweatshop." Earlier this year, VP Tim Bray resigned as a public protest against the company's treatment of workers. When the New York Times published an expose in 2015, Bezos penned a memo rebutting the charges.

Bezos casts his operation as a benevolent provider of jobs at a time when other companies are downsizing. "Offering jobs with industry-leading pay and great healthcare, including to entry-level and front-line employees, is even more meaningful in a time like this, and we’re proud to have created over 400,000 jobs this year alone," he said.

When testifying before a House antitrust subcommittee hearing in July, Bezos said Amazon employs more than a million people, which includes temporary workers.

Amazon's meaningful metrics for the three months ending September 30 include:

• Net sales of $96.1bn, up 37 per cent from $70bn in Q3 2019.
• Operating income at $6.2bn, up 94 per cent from $3.2bn in Q3 2019.
• Net income of $6.3bn, up 200 per cent from $2.1bn in Q3 2019.
• Diluted EPS at $12.37, up from $4.23 in Q3 2019.
• AWS revenue reached $11.6bn, up 29 per cent from $9bn in Q3 2019.

As a point of comparison, Microsoft on Tuesday reported 48 per cent revenue growth for its Azure cloud service.

On a conference call for investors, Amazon chief finance officer Brian Olsavsky reviewed various business highlights and talked up ongoing hiring and growth in fulfillment facilities, which he said would expand by 50 per cent in terms of square footage over the next quarter. He also mentioned the company's continued focus on protecting the health of its workers.

Amazon spent $2.5bn in employee safety improvements during Q3, he said, and plans to spend $4bn in Q4 – a significant figure in light of its current net income and another possible explanation for the stock's slight slippage in after-hours trading.

Olsavsky was also bullish on AWS, without offering specifics.

"We continue to see companies meaningfully growing their plans to move to AWS," he said, adding that the company's re:Invent conference will be free and online this year, and will last three weeks, from November 30 through December 18. ®