Anyone keeping an eye on Amazon knows how rare it is for the company to break out any sort of sales figure whatsoever. That didn’t exactly change with the company’s third-quarter earnings report on Thursday afternoon, but Amazon did say that it “signed up millions of new Prime members” during the quarter.
“We are very excited. Prime is growing very fast,” CFO Tom Szkutak said in the analyst call following the earnings report. Amazon Prime members pay $79 a year for unlimited two-day shipping and other benefits, including access to Amazon’s Netflix competitor Prime Instant Video, a streaming video library with about 40,000 movies and TV show episodes.
Prime Instant Video is “certainly helping the Prime membership increases that you’re seeing,” Szkutak said, citing “great usage.” We think it’s interesting” — Szkutak described nearly every service that analysts asked about as “interesting” — “and we are investing there.” The company’s Q4 guidance includes the costs of acquiring more content, as well as developing original content. “We’re very excited about that opportunity,” he said.
Once Prime members sign up, they tend to stick around: “We’ve seen not only a very strong increase in Prime membership, but we’ve seen very good retention of Prime members. When you look at that in terms of lifetime value, we have a customer base that’s staying with us longer [and] doing more cross-shopping.”
This apparently extends to Amazon’s grocery delivery service, AmazonFresh, which is only available in LA and Seattle for now. “Are you selling more general merchandise as a result of more frequent deliveries in [those] markets?” one analyst asked. “Yes,” said Szkutak.
As for non-Prime members, well, this week Amazon raised the minimum for its Free Super Saver Shipping from $25 to $35. Due to more eligible items and higher fuel and transportation costs, it “seemed like the right thing to do,” according to Szkutak.
Overall, earnings followed the pattern we generally see at Amazon — high revenues, low or no profits. The company pulled in $17.09 billion in revenue during the quarter, up 24 percent over this time last year and beating analysts’ expectations. It saw a loss of $41 million for the quarter, or $0.09 per share. The results sent Amazon’s stock soaring nearly 30 percent in after-hours trading, to nearly $360 — an all-time record.
For Q4, Amazon expects revenues between $23.5 billion and $26.5 billion, with the range for operating income or loss ranging all the way from -$500 million to $500 million.