AMZN Q3 2019 Earnings

Call Details

• Call Title: Amazon.com, Inc. Q3 2019 Earnings Call
• Date: October 24, 2019 at 9:30 PM UTC
• Management Team:
  • Shelley K. Pfeiffer (Director of Investor Relations)
  • Brian Olsavsky (Chief Financial Officer)
  • Dave Fildes (Director of Investor Relations)

Call Summary

Financial Performance

• Other revenue, principally advertising, grew 45% in Q3 versus the comparable period in 2018.
• AWS operating margin reached a high of 31% in the prior year quarter (last Q3) according to the discussion on segment profitability.
• AWS reported $27B in future customer commitments, which was described as up 54% year-over-year.
• Equipment leases and capital lease-related line items grew 30% on a 12-month basis in Q3, versus 9% in the prior year period.
• Paid unit growth re-accelerated in the past two quarters, with Amazon-fulfilled unit growth rising at a higher clip than overall unit growth.
• Headcount increased by roughly 100,000 in the quarter, representing a 22% year-over-year increase in employees.

Guidance

• History-adjusted guidance assumes a typical Q3-to-Q4 drop in growth rate of about 300 basis points, which is being factored into Q4 expectations.
• Diwali timing shifted incremental demand into Q3 this year versus Q4 last year and was estimated to have helped Q3 by 150 basis points while creating a negative headwind in Q4 international growth.
• The October 1st Japan consumption tax change produced a pre-buy in Q3 estimated to provide 40 basis points of company-level favorability in Q3 and an expected roughly 80 basis point company-level headwind in Q4.
• Q4 guidance incorporates current order trends and multiple assumptions and explicitly excludes any additional acquisitions, investments, restructurings, or legal settlements.
• A nearly $1.5 billion incremental year-over-year shipping/transportation cost was built into Q4 guidance related to the expansion of one-day shipping capacity.
• Guidance was described as inherently unpredictable and sensitive to FX, global economic conditions, and order demand volatility.