Misses - AWS Revenue Surges 39%

October 29, 2021 reported financial results for its third quarter ended September 30, 2021. The firm had earnings of $6.12 with $8.92 per share expected. As to revenue, the big tech giant took in $110.81 billion, but $111.6 billion was expected.

Amazon Web Services notched revenue which rose 39% to $16.11 billion, with expected sales only being $15.48 billion. AWS generated $4.88 billion in operating income in the period, while's operating profit was $880 million.

“We’ve always said that when confronted with the choice between optimizing for short-term profits versus what’s best for customers over the long term, we will choose the latter—and you can see that during every phase of this pandemic,” said Andy Jassy, Amazon CEO. “In the first several months of COVID-19, Amazonians played an essential role to help people secure the requisite PPE, food, and other in-demand items needed, and we worked closely with businesses and governments to leverage AWS to maintain business continuity as they responded to the pandemic. Customers have appreciated this commitment, which is part of what’s driving this past quarter’s AWS growth acceleration to 39% year over year; but, it’s also driven extraordinary investments across our businesses to satisfy customer needs—just one example is that we’ve nearly doubled the size of our fulfillment network since the pandemic began. In the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”

  • Operating cash flow decreased 1% to $54.7 billion for the trailing twelve months, compared with $55.3 billion for the trailing twelve months ended September 30, 2020.
  • Free cash flow decreased to $2.6 billion for the trailing twelve months, compared with $29.5 billion for the trailing twelve months ended September 30, 2020.
  • Free cash flow less principal repayments of finance leases and financing obligations decreased to an outflow of $8.8 billion for the trailing twelve months, compared with an inflow of $18.4 billion for the trailing twelve months ended September 30, 2020.
  • Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations decreased to an outflow of $3.9 billion for the trailing twelve months, compared with an inflow of $17.9 billion for the trailing twelve months ended September 30, 2020.
  • Common shares outstanding plus shares underlying stock-based awards totaled 523 million on September 30, 2021, compared with 518 million one year ago.
  • Net sales increased 15% to $110.8 billion in the third quarter, compared with $96.1 billion in third quarter 2020. Excluding the $0.5 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 15% compared with third quarter 2020.
  • Operating income decreased to $4.9 billion in the third quarter, compared with $6.2 billion in third quarter 2020.
  • Net income decreased to $3.2 billion in the third quarter, or $6.12 per diluted share, compared with $6.3 billion, or $12.37 per diluted share, in third quarter 2020.
Fourth Quarter 2021 Guidance
  • Net sales are expected to be between $130.0 billion and $140.0 billion, or to grow between 4% and 12% compared with fourth quarter 2020. This guidance anticipates an unfavorable impact of approximately 60 basis points from foreign exchange rates.
  • Operating income is expected to be between $0 and $3.0 billion, compared with $6.9 billion in fourth quarter 2020.
  • This guidance assumes, among other things, that no additional business acquisitions, restructurings, or legal settlements are concluded.
Wall Street was expecting revenue to rise 13.2% year-over-year to $142.1 billion.

Amazon Web Services

  • AWS announced significant customer momentum, with new commitments and migrations from customers across major industries.
    • Manufacturing: NXP, a leading European designer and manufacturer of specialized semiconductors, selected AWS as its preferred cloud provider. NXP is migrating the vast majority of its electronic design automation workloads from NXP data centers to AWS. Leaders across the automotive industry, including Capgemini Engineering, CARIAD, and Continental, joined AWS in a special interest group supporting Arm’s Scalable Open Architecture for Embedded Edge to bring cloud-native practices and software-defined architectures to the automotive industry.
    • Hospitality and ecommerce: Wyndham Hotels & Resorts, Inc., the world’s largest hotel franchising company, selected AWS to upgrade its technology infrastructure and develop and deliver new guest services across its 21 hotel brands—including Ramada, Travelodge, and Wyndham. VTEX, a global ecommerce solution provider, is working with AWS to create a new direct-to-consumer solution that gives large enterprises the ability to quickly and easily launch ecommerce sites and experiences to sell directly to consumers.
    • Telecom: Boingo Wireless, a leading distributed antenna system, Wi-Fi, and private network provider, announced an expanded collaboration with AWS to enable airports, stadiums, and large businesses to unlock new 5G use cases with advanced multi-access edge computing.
    • Financial services: Sun Life, an international financial services and insurance company, selected AWS as its long-term strategic cloud technology provider. Black Knight, a software, data, and analytics provider to the mortgage, real estate, and capital markets verticals, selected AWS to develop mortgage-specific AI applications.
    • Healthcare and life sciences: Baxter International Inc., a global medical products company, is moving from its own data centers into AWS and has already seen benefits, including increased speed to market for new tools and solutions, the ability to quickly expand technology solutions to new geographies, and significant cost savings.
    • Security operations: Arctic Wolf Networks selected AWS as its primary cloud provider to power its innovative, cloud-native security operations platform as it expands globally. Using AWS, Arctic Wolf is able to process more than 1.4 trillion unique security events a week to help its customers manage rapidly evolving digital threats.
  • AWS announced plans to open an infrastructure Region in New Zealand in 2024 that will consist of three Availability Zones, giving customers more choice and flexibility to leverage advanced technologies. A newly released AWS economic impact study estimates that the new infrastructure Region will create 1,000 new jobs in New Zealand over the next 15 years through the investment of $5.3 billion (NZ$7.5 billion). Globally, AWS has 81 Availability Zones across 25 geographic Regions, with plans to launch 24 more Availability Zones and eight more AWS Regions.
  • AWS announced three new capabilities for Amazon Connect, an easy-to-use, highly scalable, and cost-effective omnichannel cloud contact center solution that improves contact center agent productivity and provides superior service by making customer interactions more effective, personal, and natural. The new features give agents the right information at the right time to provide fast and secure caller authentication, the ability to answer customer questions more quickly, and the ability to make the overall process easier and more efficient. Tens of thousands of AWS customers are supporting more than 10 million contact center interactions a day on Amazon Connect.
  • AWS announced the general availability of Amazon MemoryDB for Redis, a fully managed, Redis-compatible, in-memory database that enables customers to achieve ultra-fast performance with high availability and durability for their most business-critical applications that require sub-millisecond response times. With Amazon MemoryDB for Redis, customers can use the same familiar and flexible Redis data structures and application programming interface (API) they use today without having to separately manage a cache and a durable database, or the required underlying infrastructure.
  • AWS announced the general availability of Amazon Managed Grafana, a fully managed data visualization service that enables customers to instantly query, correlate, and visualize operational metrics, logs, and traces, as well as Internet of Things (IoT) data. Developed in collaboration with Grafana Labs, Amazon Managed Grafana manages the provisioning, setup, scaling, and maintenance of Grafana so customers can easily create dashboards to view operational data from multiple data sources without having to worry about the underlying Grafana infrastructure.
  • AWS announced the general availability of Amazon Managed Service for Prometheus, a scalable, secure, and highly available service that makes it easier for customers to monitor containerized applications. Amazon Managed Service for Prometheus is fully compatible with open-source Prometheus and provides the same familiar time series data model and Prometheus Query Language customers use today to monitor containerized applications.
  • AWS announced the general availability of Amazon QuickSight Q, a new capability in Amazon QuickSight that gives anyone access to powerful analytics with the ability to ask business questions using natural language and receive accurate answers with relevant visualizations. Amazon QuickSight Q does not depend on prebuilt dashboards or reports to deliver visualizations, which removes the need for business intelligence analysts to update a dashboard every time a new business question arises. This allows anyone to ask questions and receive visual answers in seconds.
  • AWS announced the general availability of Amazon FSx for NetApp ONTAP, a new storage service that provides the first complete, fully managed NetApp ONTAP file system in the cloud, making it easy for customers to run their applications on AWS without changing their code or how they manage data.
  • AWS announced the general availability of Amazon Elastic Compute Cloud (Amazon EC2) DL1 instances, a new instance type designed for training machine learning models. DL1 instances provide up to 40% better price per performance for training machine learning models than the latest GPU-powered Amazon EC2 instances.
  • AWS announced the general availability of the AWS Panorama Appliance, a new device that customers can install to run machine learning applications on multiple video streams from existing on-premises cameras. The AWS Panorama Appliance enables customers to use machine learning to quickly and easily perform visual inspections of production lines, monitor drive-through queues at quick-service restaurants, or assess the layout of their physical locations for ideal product placement.

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