Amazon Earnings Top Estimates but the Cloud Business Is Just OK
3 min
Amazon shares gained ground in late trading Thursday after the company posted better-than-expected financial results for the September quarter.
Amazon (ticker: AMZN) said third-quarter sales were $143.1 billion, up 13% from a year ago, accelerating from 11% growth in the June quarter, and above the high end of the company’s guidance range.
Profits were 94 cents a share, well above the consensus of 58 cents. Net income of $9.9 billion included a $1.1 billion pretax noncash gain on the company’s stake in Rivian Automotive (RIVN).
Amazon Web Services revenue was $23.1 billion, up 12.3% from a year ago, which was about in line with Wall Street estimates, and consistent with the 12.2% increase one quarter earlier.
Amazon CFO Brian Olsavsky said in a call with reporters that the company increased AWS revenue by about $900 million versus three months earlier. He also noted that customers continue to focus on spending optimisation, but that the process is slowing down. He declined to say whether the growth rate for AWS has now bottomed.
Amazon shares were trading around breakeven heading into the company’s conference call late Thursday, but they moved higher after CEO Andy Jassy said on the call that AWS booked some large contracts late in the third quarter. They won’t start showing up in results until the fourth quarter, he said.
The stock was up 4.6% in late trading as of 6:15 p.m.
Heading into the earnings report, AWS growth had decelerated for six straight quarters, falling to 12.2% in the June quarter, from 39.5% in the last quarter of 2021. The slowing growth reflects a recent focus from cloud customers on “optimising” their cloud spending, figuring out how to get more value from their growing cloud outlays.
This week’s results from cloud rivals Alphabet (GOOGL) and Microsoft (MSFT) both noted that the optimization trend is continuing. The Google Cloud business posted disappointing results in the quarter, while Microsoft topped expectations. Amazon largely split the difference. Amazon bulls have expected AWS growth to begin accelerating soon as corporate spending budgets loosen and a focus on AI workloads expands, but there was no big jump in the latest quarter.
Operating income was $11.2 billion, well above the company’s forecast range of $5.5 billion to $8.5 billion. That incudes an operating profit in North America of $4.3 billion, reversing a loss of $400 million in the year ago quarter. AWS had an operating profit of $7 billion, up from $5.4 billion in the year-earlier period.
“We had a strong third quarter as our cost to serve and speed of delivery in our stores business took another step forward, our AWS growth continued to stabilise, our advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” Amazon CEO Andy Jassy in a press release.
Shares of Amazon were up 3.4% in late trading following the report.
Online store sales were $57.3 billion, up 7%, improving from 4% growth in the June quarter, while third-party services revenue was $343 billion, up 20%, versus 18% growth in the June quarter.
Amazon said subscription services revenue—mostly Amazon Prime—was $10.2 billion, up 14%. Sales at physical stores were $5 billion, up 6%.
Advertising revenue jumped 26% in the quarter, from 22% in the June quarter, to $12.1 billion. Olsavsky said the company isn’t seeing an impact from geopolitics. That’s a contrast from Meta, which noted on its earnings call Wednesday that the company was seeing some slowdown in spending tied to the outbreak of violence in the Middle East.
Olsavsky noted that ad growth has outpaced overall company growth, driven by improved targeting and higher click-through rates.
For the fourth quarter, Amazon sees sales of between $160 billion and $167 billion, with operating income ranging from $7 billion to $11 billion. Wall Street estimates for the quarter have called for revenue of $167.2 billion, up 12%, with operating income of $8.7 billion.
Amazon shares were down 1.5% in Thursday’s regular session.
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With US$40 million already committed, the Global Talent Fund is attracting investor attention with a strategy focused on building globally scalable consumer brands alongside high-profile talent.
2 min
A new investment fund targeting celebrity-founded consumer brands has secured US$40 million in commitments and is rapidly approaching its US$50 million fundraising target, signalling growing investor appetite for alternative opportunities beyond traditional asset classes.
The Global Talent Fund, which has a maximum raise of US$100 million, focuses on building and investing in consumer businesses alongside celebrities, athletes, and influential personalities who play an active role as co-founders rather than simply endorsing products.
The strategy is based on the belief that changes in consumer behaviour, particularly the rise of social media and digital engagement, have fundamentally altered how brands are built and scaled.
GTF founding partner Jeremy Hunt, who is helping lead the fund’s strategy, said consumers increasingly feel connected to personalities they follow online and are more willing to support products developed by those individuals.
“Consumers are searching for content to engage with, and when a celebrity they like or follow takes them on the journey of creating a product or brand, they genuinely feel part of that process,” he said.
The fund is targeting high-growth consumer sectors including wellness, hydration, beauty and recovery, areas Hunt believes continue to benefit from strong global demand and ongoing innovation.
Rather than backing celebrity endorsement deals, the fund is seeking businesses where talent is deeply involved in product development, brand creation and long-term growth.
According to Hunt, authenticity remains one of the biggest differentiators between successful celebrity-backed brands and those that fail.
“The consumer can see clearly if someone is simply being paid to promote a product,” he said. “The winners are typically the brands where the celebrity has genuinely helped build the business from the ground up.”
The model has attracted support from several prominent Australian investors and business families, reflecting broader interest in alternative investments with global growth potential.
Hunt said consumer brands offered a level of tangibility that many investors found appealing.
“Consumer brands are what we touch, feel, smell and taste every day,” he said. “Our investors understand the growth potential in the model, but they also want to be part of the journey.”
The fund’s rapid progress towards its fundraising target comes amid growing recognition that celebrity influence, when combined with strong commercial execution and scalable business models, can create significant enterprise value.
With several high-profile celebrity-founded businesses generating billion-dollar exits in recent years, supporters of the strategy believe the opportunity remains in its early stages.
For more information, contact marc@kanebridge.com.au
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