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Reviewing Internet Companies' 3Q17 Earnings

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Reviewing Internet Companies' 3Q17 Earnings PART 1 OF 10

Why Amazon’s Revenue Growth Sped Up in 3Q17

Revenue grew 34% in 3Q17

The US-based (SPY) e-commerce titan Amazon (AMZN) reported its 3Q17 results on October 26, posting earnings and revenue figures that beat expectations. Revenue growth also accelerated compared to both 2Q17 and 3Q16. 

Amazon generated revenue of $43.7 billion in 3Q17, up 34% year-over-year. In 3Q16, Amazon’s revenue grew 29% year-over-year. In 2Q17, Amazon’s revenue grew 25% year-over-year.

Amazon competitor eBay (EBAY), which reported its 3Q17 results on October 18, posted revenue growth of 9.0% year-over-year. PayPal (PYPL), a former eBay affiliate and competitor of Amazon’s in the business of advancing small business loans, reported 21% year-over-year growth in revenue in 3Q17. Beyond their core businesses, Amazon, PayPal, and Square (SQ) supply credit mostly to their merchant customers as a way to help them grow. The companies have each supplied more than $1.5 billion in loans since launching their credit operations.

Why Amazon’s Revenue Growth Sped Up in 3Q17

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Factors in play

The contribution from Whole Foods Markets, the organic foods retailer that Amazon acquired in August, and favorable foreign exchange rates, underpinned the acceleration of Amazon’s revenue growth. Whole Foods contributed $1.3 billion to Amazon’s top line in 3Q17 while favorable foreign exchange rates added $124 million to the top line.

In 3Q16, favorable forex rates added just $52 million to Amazon’s top line, which shows that Amazon saw double the favorable foreign exchange impact in 3Q17 compared to 3Q16.

Amazon outperforms expectations

Amazon beat top-line consensus estimates by about $1.6 billion and consensus EPS estimates by $0.49 in 3Q17.

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