Amazon earnings: What to expect amid a record-breaking tech boom
Amazon enjoyed a stellar 2020, so all eyes will be on the ecommerce giant tomorrow night as it reports earnings for the final quarter of the year.
Apple last week kicked off tech earnings season with bumper revenue of $111.4 (£81.5bn) — its best ever quarter, while Facebook also beat expectations.
Amazon is also expected to break through the highly sought-after $100bn barrier after posting revenue of $96.1bn in the three months to the end of September. The company has forecast revenue of between $112bn and $121bn.
Sales are likely to be boosted by Prime Day, its annual promotional event that took place in October. Amazon said these surpassed $3.5bn — a 60 per cent increase on 2019.
Tom Johnson, chief transformation officer at Mindshare Worldwide, said Amazon’s core commerce business was “likely to smash it out of the park”.
“The holiday season is usually busy but 2020 numbers will set new records, not least because they also include Prime Day delayed from earlier in the year (as well as Black Friday and Cyber Monday) and Amazon has beaten the analyst expectations for the last four quarters in a row, so we expect this to happen again,” he said.
Paul Adams, chief executive of marketplace services platform Tambo, said: “The main reason driving the uptick comes as no surprise: Covid-19 has accelerated the move to e-commerce between five to 10 years.
“Amazon is the major winner and is the blueprint for e-commerce — it’s becoming more than just a sales platform, with many brands using Amazon as an insights and branding platform now too.”
Johnson added that Amazon was “winning on two fronts at the same time”, as it had also benefited from increased demand for its cloud services during the pandemic.
While Amazon has achieved record levels of profitability over the last year, it warned that profits were likely to be hit in the final three months of the year as it forecast $4bn of costs related to the pandemic.
Analysts also said that Amazon will be focused on ensuring it does not suffer from a sharp drop-off in sales as the pandemic ends and societies begin to ease restrictions.
Expectations will also be high as Google owner Alphabet reports quarterly earnings tomorrow, as the tech giants continue to cash in on higher demand for their services during the Covid crisis.