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What's New With, Inc.?

By Anders Bylund - Oct 23, 2017 at 10:06PM

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The e-tailer is reporting earnings on Thursday. Here's a checklist of guidance targets and other investable data points to look out for.

Online retailer (AMZN 3.15%) is about to release its third-quarter results. After the closing bell on Thursday, Oct. 26, investors will get a fresh look at Amazon's business status. Here's a quick look at what to expect from this important update.

Amazon's Q3 guidance

Management offered some guidance targets for the third quarter.

Net sales are expected to land near $40.5 billion, representing year-over-year growth of roughly 24%. Further down the income statement, Amazon's operating income should stop fairly close to the breakeven point -- the guidance range stretches from $400 million of red ink to $300 million in the black. In the year-ago quarter, Amazon's operating income was $575 million.

These figures assume a $125 million revenue headwind based on currency exchange effects, and it doesn't include any contributions from recently acquired grocery store chain Whole Foods Market. With the $13.7 billion deal pending at the time, Whole Foods didn't issue any guidance for the next quarter three months ago, so there's no official advice to lean on here. For what it's worth, Whole Foods' year-ago quarter included sales of $3.5 billion and GAAP net income of $88 million. The company also produced $157 million of free cash flows in that period.

Semi truck with a white Amazon Prime logo on its sky blue trailer.

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Beyond the numbers

Investors will obviously be looking for more detail on the Whole Foods integration process. This being Amazon's first quarterly report since the dotted line was signed, there are many question marks surrounding the e-tailer's sudden interest in traditional retail operations. Management will field many questions around this topic on the earnings call, and any new detail will be analyzed in every available light.

In other investor-facing news, Amazon is preparing to open a second headquarters campus in a city not named Seattle. We're talking about a $5.5 billion investment with high-quality paychecks for 50,000 Amazon employees over the next couple of decades, so local leaders across the country are hustling to win this deal. Any hints on where Amazon is leaning are sure to be warmly welcomed.

Among other interesting moves that deserve some attention in this earnings report, I'll also keep an eye out for more news on the following tidbits:

  • How far did this year's Prime Day event, which fell in the third quarter on July 11, move the needle for Amazon?
  • Has the recent partnership with department store Kohl's (KSS -19.64%) smoothed out the process for merchandise returns in a measurable way? And is this really Amazon's way of getting a closer look at Kohl's in preparation for another bricks and mortar buyout?
  • Will Amazon keep ratcheting up its investment in original Amazon Prime Video shows and films, and how strongly does this effort help the company pick up new Amazon Prime members?
  • And of course, we won't be told how many Prime members the company is cradling these days, but we can always dream.

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