Amazon sold nearly US$100 billion worth of products last quarter as millions of people relied on the ecommece giant during lockdowns. The increased online activity also drove a 51 per cent jump in ad revenue for Amazon.
In Q3 results reported late last week, Amazon confirmed its business has continued to boom during the pandemic. But a commitment to spend another US$4 billion on coronavirus related expenses and a wide guidance range for the holiday quarter actually sent its share price down.
The company reported quarterly revenues of US$96.15 billion in Q3– better than analyst expectations – and its net income increased to US$6.3 billion.
Amazon’s cloud arm AWS generated US$11.6 billion in revenue for the quarter, up 29 per cent. AWS now accounts for 12 per cent of the company’s total revenue.
Amazon committed much of that money into more coronavirus related expenses including a commitment to 100,000 new permanent jobs around the world.
On an earnings call Amazon CFO Brian Olsavsky said, “In total, we have incurred more than $7.5bn in incremental COVID-related costs in the first three quarters of 2020, and we expect to incur approximately $4bn in Q4.”
CEO and world’s richest man Jeff Bezos, who is now worth in excess of $200 billion, drew attention to Amazon’s decision to pay workers a minimum US$15 per hour.
“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,” Bezos said in a statement before tipping another unprecedented holiday season for the tech giant.
Ad business soars
Like Google, Amazon reported its ad business is back in full swing in Q3. Amazon now records more than US$5 billion in its “other” sales category, which primarily includes its advertising services. The category has grown steadily but had its biggest jump in Q3 2020 as Amazon attracted more eyeballs and more ad dollars to its platforms.
“We just had a lot more traffic,” said CFO Olsavsky on the earnings call, “and we do a good job of turning that traffic into valuable real estate for our advertisers and for our customers to get — to find out more about selection and brand discovery. So most of that is — it was a strong quarter in advertising, and that’s what you’re seeing in the other revenue line.”
Amazon head of investor relations Dave Fildes said the company is focused on making its tools easier for advertisers to use, how it delivers more relevant ads to consumers, and advertising measurement.
“We’re certainly in a unique position to be able to provide measurement services that help all these brands sort of understand the impact of other advertising in ways that are going to help them grow their business.”