Amazon(US:AMZN) ZACKS·2025-10-31 19:22Core Insights - Amazon.com (AMZN) shares surged over 13% in after-hours trading following a strong Q3 2025 earnings report, with earnings per share of $1.95, a 36.4% increase year-over-year, and exceeding the Zacks Consensus Estimate by 23.42% [1][10] Financial Performance - Net sales reached $180.1 billion, a 13.4% year-over-year increase, surpassing management's guidance of $174-$179.5 billion and beating the Zacks Consensus Estimate by 1.29% [2] - Net income was $21.2 billion, up 38.2% year-over-year, significantly aided by pre-tax gains of $9.5 billion from investments in Anthropic [3][10] Revenue Breakdown - Product sales (41.1% of total sales) increased 9.6% year-over-year to $74.05 billion, while service sales (58.9% of total sales) rose 16.3% to $106.1 billion [4] - North America revenues (59% of total sales) grew 11.2% year-over-year to $106.2 billion, and international revenues (22.7% of total sales) increased 14% to $40.8 billion [4] - AWS revenues (18.3% of total sales) rose 20.2% year-over-year to $33 billion, although growth lagged behind competitors Google and Microsoft [5][10] Advertising and Third-Party Sales - Sales from third-party seller services increased 12% year-over-year to $42.4 billion, exceeding the Zacks Consensus Estimate by 1.48% [6] - Advertising services revenue grew 24% year-over-year to $17.7 billion, also beating consensus estimates by 2.47% [7] Consumer Engagement and Innovations - Amazon's Prime services saw revenues of $12.2 billion, a 12% year-over-year increase, surpassing consensus estimates [12] - The AI-powered shopping assistant, Rufus, reached 250 million customers, with users showing 60% higher purchase completion rates [11] Operating Metrics - Operating expenses were $162.7 billion, up 15% year-over-year, with operating income at $17.4 billion, flat compared to the previous year [14][16] - North America segment operating income decreased 15.4% to $4.78 billion, primarily due to a $2.5 billion FTC settlement charge [17] Balance Sheet and Cash Flow - As of September 30, 2025, cash and cash equivalents were $66.9 billion, while long-term debt decreased to $50.7 billion [19] - Operating cash flow increased 16% to $130.7 billion, but free cash flow dropped to $14.8 billion due to significant capital investments in AI infrastructure [20][21] Future Guidance - For Q4 2025, Amazon anticipates net sales between $206 billion and $213 billion, reflecting 10% to 13% growth year-over-year, with expected operating income ranging from $21 billion to $26 billion [22]