The holidays are quickly approaching, and with numbers like Amazon.com (NASDAQ: AMZN) recently reported, the company appears well-positioned to have a big season. The retailer surprised the market with a strong earnings release, but what is the company expecting for the upcoming holiday period and beyond?
Listen to the entire podcast by clicking here. A full transcript follows the video.
Sean O'Reilly: How does guidance look? They try to have their own Black Friday, or something? I look forward to that at the end of the next month.
Dylan Lewis: Oh, yeah. Amazon's Retail Day. The Amazon holiday they invented. How brilliant is that?
O'Reilly: Yeah. It's all good. So what did they say about the holidays?
Lewis: I thought there were two really cool notes from the PR release they had. One of them was: they expect a record holiday season. That gets you to perk up a little bit. Amazon expects revenue between $33.5 billion and $36.75 billion during the fourth quarter. That would be year-over-year growth of 14% to 25% depending on where they land in that range.
Lewis: Impressive. Operating income is expected to be somewhere between $80 million and $1.2 billion compared to $590 million in the fourth quarter of last year. The high-end of Amazon's guidance would be more than doubling operating profit year over year. That's pretty incredible.
O'Reilly: They've got to pay for that new headquarters somehow.
Lewis: Yeah. A lot of what's pushing this is their AWS growth.
Lewis: What's going on in retail for them is huge, and the kind of growth they're seeing on their platform is great; but this insane stat that I saw was, "AWS accounts for about 8% for Amazon's revenue and roughly half of its profits."
O'Reilly: Oh my God.
Lewis: To give you an idea of the kind of margins that they're working with, that's insane. They seem like they're going to continue to grow.
O'Reilly: I don't know how they snuck in. I'm a happy Prime member, and I actually save all my videos and photos of my son -- I just didn't want to be totally tied to Apple for diversification's sake. I cannot comment on their AWS ...
Lewis: The B2B side of things.
O'Reilly: Yeah, the B2B side. The value proposition is awesome. It's like $6 a month, or something. Good to go. All my photos are there.
Lewis: That's been the appeal a long time for customers. You're like, "Oh, I'm getting this insane package of stuff. I'm getting free, two-day shipping. I'm getting all this media that's available to me."
O'Reilly: I love the shows on Prime.
Lewis: Shows are great; in terms of their original programming, it's really fantastic. For a long time, it's been that it's a great value proposition for customers. You can see how they're building up this huge user base. Is it going to be a profitable business?
O'Reilly: It is now!
Dylan Lewis has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.