Online retail giant and heavyweight tech name (AMZN) is set to report Q3 earnings today after the close today followed by conference call at 5:30pm ET. 

Current Quarter Expectations: Operating income and revenues estimates are usually near the upper end of the company's guidance—which tends to be conservative—but headed into this quarter, operating income estimates are above the high end of outlook provided with the Q2 earnings release. Q3 is a typically a lower operating income quarter as the company prepares for the holiday peak in Q4. 

Look for the following:

  • Customer/seller growth metrics (discussed during the conference call)

    • Q2 Seller units/third party were 49% of paid units (48% last qtr)

    • Q2 unit growth metric was 28% (slightly higher than 27% from prior qtr and well above 22% reported prior year)

  • Based on AMZN options, the current implied volatility is 2x higher than the historical volatility (over the past 30 days). The 1-day event volatility is ~50 points (6%).

  • Secondary playsRetail focus - WMT (reports earnings Nov 17 before the open), ETSY (earnings Nov 1; AMZN competing service - Handmade service), BBY (earnings expected mid November), W (earnings Nov 8 before the open), EBAY (reported last week), BABA (earnings late October). Shipping - UPS and FDX (ATSG new partner). Cloud -- SKYY (ETF). Food delivery(been expanding Prime Now local restaurant delivery service): Grubhub (GRUB), Yelp (YELP) and Square (SQ). Prints service: Shutterfly (SFLY), Kodak (KODK).

  • ETF/index components: S&P500 (SPX) 1.8%, Retail HOLDRS Trust (RTH) 18%, Consumer Dis Spdr (XLY) 14%, US Consumer Services (IYC) 11%, PowerShares QQQ (QQQ) 7.6%, First Trust Cloud ETF (SKYY) 5%, SPDR Retail (XRT) 1.3%


  • Reports Q3 (Sep) earnings of $0.52 per share, $0.30 worse than the Capital IQ Consensus of $0.82; revenues rose 29.0% year/year to $32.71 bln vs the $32.65 bln Capital IQ Consensus; operating income $575 mln vs. $50-650 mln guidance and $670 mln estimates.
    • NA net sales +26% to $18.9 bln; GAAP operating income 37% to $255 mln
    • Int'l net sales 28% to $10.6 bln; GAAP OI ($541) mln.
    • AWS net sales +54.5% to $3.2 bln; GAAP operating income +101% to $861 mln. 
  • Co issues in-line guidance for Q4, sees Q4 revs of $42.0-45.5 bln vs. $44.65 bln Capital IQ Consensus. Operating income is expected to be between $0 and $1.25 billion, below estimates, vs. $1.1 billion in fourth quarter 2015.