Trillion Dollar Milestone Reached in Company’s 25th Year
When Amazon announced its third quarter results ending September 30, 2018, its $56.6 billion in net sales brought its cumulative revenue to $989.57 billion1. It also announced guidance for net sales this quarter of $66.5 billion to $72.5 billion. Now that we’re 42 days into this quarter (45 percent through), it’s safe to say that the company has surpassed $1 trillion in cumulative revenues.
In other words, the company needed only $11 billion (16.5 percent of its lower guidance) to pass this milestone, but it’s now nearly halfway through the quarter. Certainly, the company’s revenue is higher closer to the holidays but it has met this milestone even estimating with its third quarter results which are lower than the company’s current guidance. i.e. Amazon would have to miss its fourth quarter guidance by 84 percent for this conclusion to be wrong.
Amazon’s Washington state neighbor, Microsoft, passed its $1 trillion milestone in 2016.
I’m including a viewable copy my spreadsheet of data for this article.
Amazon Reached this Milestone Fastest
Amazon’s reached this milestone in 25 years whereas it took Apple and Microsoft more than 40 years:
Amazon’s Cumulative Profit Currently Smaller than Tech Bros
I estimate that Amazon has cumulative net income of $16.58 billion whereas Apple ended last quarter at $386.3 billion and Microsoft at $310 billion. The delta between Amazon, Apple and Microsoft’s profit is visually striking.
At Microsoft’s trillion dollar milestone, it had $267 billion in net income, 16.29 times more than Amazon and Apple had $232 billion, 14.1 times greater.
Even if Apple’s profits level off, Amazon would still have to double its profit in each of the next five years to surpass the company’s cumulative earnings.
Amazon’s Profits are Poised for Growth
Despite its comparatively smaller profits to date, analysts are bullish about Amazon’s future. Morningstar analyst R.J. Hottovy sees Amazon shares as undervalued. As the company continues its international growth, reduces human hours with automation and leverages the investments made with its trillion in revenue, the optimism is understandable.
The Street’s Brian Sozzi says, it could “turn on the profit spigot” going forward.
Amazon is charting a path of destruction. …The fact is Amazon continues to exert insane amounts of pressure on the weak… Also nuts is how CEO Jeff Bezos could turn on the profit spigot at the drop of the dime… —The Street
Overall, the trillion dollar revenue milestone showcases Jeff Bezo’s unique genius. His vision and management of the company’s execution is extraordinary. Amazon investors may have a lot to look forward to.
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- Amazon’s Antitrust Antagonist Has a Breakthrough Idea (New York Times)
1 Amazon uses the term Net Sales which adjusts gross revenues for returns, allowances and discounts. It’s a more accurate measure of incoming revenue.