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Amazon (AMZN) revenue Q3 2021

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Amazon shares fell more than 4% in expanded trading on Thursday after the company reported weaker-than-expected third-quarter results and disappointed forecasts for the critical holiday season.

  • Merits: Analysts polled by Refinitiv said it expected $ 6.12 versus $ 8.92 per share
  • Revenue: $ 110.81 billion versus an expected $ 111.6 billion, according to analysts polled by Refinitiv

Amazon anticipates slower sales growth as consumers return to physical stores and the company faces supply chain challenges. Revenue rose 15% in the third quarter, compared to 37% in the same period last year.

For the fourth quarter, Amazon is forecasting sales between 130 and 140 billion US dollars, which corresponds to growth between 4 and 12 percent. Analysts surveyed by FactSet expected revenue to grow 13.2% year over year to $ 142.1 billion.

Amazon CEO Andy Jassy said the company expects the company to incur “billions of dollars” of additional costs in its consumer business in the fourth quarter due to labor shortages, higher labor costs, global supply chain constraints and increased freight and shipping costs. Amazon overcomes these challenges when it hits the main holiday season, he said.

“It will be expensive for us in the short term, but it is the right prioritization for our customers and partners,” Jassy said in a statement.

The company has taken steps to strengthen its supply chain in the face of global challenges by adding new shipping ports and increasing its fleet of aircraft and trucks.

Amazon announced earlier this month that it would be hiring 275,000 permanent and seasonal employees nationwide, in part to handle the Christmas shopping rush. CFO Brian Olsavsky said Amazon faced heavy labor costs in the last quarter to hire and retain employees, including giving out $ 3,000 sign-up bonuses and introducing new perks like free tuition.

Speaking to reporters on the phone, Olsavsky said Amazon expects to pay $ 4 billion in costs related to labor and inflation and productivity headwinds in warehouses.

Amazon said its fourth quarter operating profit will be between $ 0 billion and $ 3 billion. That’s a significant decrease from operating profit of $ 6.9 billion for the same period last year.

Online store sales rose 3% year over year to $ 49.9 billion, while physical store sales rose 13% to $ 4.27 billion.

Revenue from third-party services, which includes marketplace commissions and fulfillment and shipping fees, rose 18% to $ 24.25 billion, a slowdown from growth of 34% in the second quarter and 60% in the first quarter .

For the first time in its history, Amazon service sales exceeded retail sales. Net product revenue for the quarter was $ 54.9 billion, while revenues from Amazon Web Services, advertising, third-party services, and Prime subscriptions totaled $ 55.9 billion.

Amazon Web Services surpassed the estimates with a jump in sales of 39% to 16.11 billion US dollars, while analysts expected sales of 15.48 billion US dollars. AWS had $ 4.88 billion in operating income for the period, while the parent company’s operating profit was only $ 880 million.

Without the hefty profit from AWS, Amazon would have posted a loss for the quarter.

This story evolves. Check back for updates.

SEE: Check out Jim Cramer’s full interview with AWS CEO Adam Selipsky

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