SEATTLE — Amazon.com booked a strong third quarter, with net sales increasing by 13% to $143.1 billion for the period ended Sept. 30.
The North American segment of the e-commerce giant’s business was up 11% year-over-year, reaching $87.9 billion, while international jumped 16% to $32.1 billion. Amazon Web Services (AWS) had a quarterly increase of 12% year-over-year to $23.1 billion.
“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 continued to stabilize, our advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” said Andy Jassy, CEO.
Operating income for the quarter increased to $11.2 billion vs. $2.5 billion for the same quarter in 2022, a rise of 343%. Free cash flow improved to an inflow of $21.4 billion for the trailing 12 months compared with an outflow of $19.7 billion for the trailing 12 months in 2022. Diluted earnings per share for the third quarter were 94 cents vs. 28 cents for the same quarter in 2022.
In reflecting on the quarter, CFO Brian Olsavsky said during the earnings call, “From a customer behavior standpoint, we still see customers remaining cautious about price, trading down where they can and seeking out deals, coupled with lower spending on discretionary items.
“Building momentum from last quarter, we set another record for delivery speed. For the year-to-date through the third quarter, we have delivered at the fastest speeds ever in the United States. These improvements in delivery speeds have been a key driver of growth and are resulting in increased purchase frequency by our Prime members,” he said.
On the call, Jassy credited the company’s move to eight regions for fulfillment from a single national network as one of its successes.
“Our move earlier this year from a single national fulfillment network in the U.S. to eight distinct regions represented one of the most significant changes to our fulfillment network in our history. This change has gone more smoothly and made more impact than we optimistically expected,” he said.
“Shorter travel distances and fewer touches mean lower cost to serve. But perhaps most importantly, shorter distances and fewer touches mean that customers are getting their shipments faster,” said Jassy.
He also noted that Amazon is continuing to expand on its generative A.I. projects, which span its AWS business; advertising, with an A.I. image generation tool; and Alexa, its cloud-based voice assistant.
“Every one of our businesses is building generative A.I. applications to change what’s possible for customers,” said Jassy, “and we have a lot more to come.”
Looking to the final quarter of the year, Amazon’s guidance puts net sales in the $160 billion to $167 billion range, which would be a growth rate of between 7% and 12% compared with Q4 2022. Operating income is expected to range from $7 billion to $10 billion vs. $2.7 billion in the last quarter of 2022.