Add this to the list of things Amazon CEO Jeff Bezos has to be thankful for this Thanksgiving: $1 trillion in revenue over 25 years.
According to an analysis by technologist and writer Jeff Reifman, Amazon most likely passed this milestone early in the current quarter. The company reported third quarter net sales of $56.6 billion at the end of September, bringing its cumulative revenues to $989.57 billion. The fourth quarter has now passed the halfway mark, which means the company has almost assuredly closed the $10.43 billion gap to reach $1 trillion.
What does this mean for the e-commerce giant? As a financial metric, not much — aside from bragging rights. Amazon is only the third technology company to reach this mark, and it did so in under 25 years. Apple took 40 years and Microsoft needed 42 years to reach $1 trillion in cumulative revenue, according to Reifman’s analysis.
Amazon’s record revenue growth came at the expense of profits. Over the company’s lifetime, its net income has lagged far behind Apple, Microsoft and others. Only in the past year has the company started to regularly post quarterly net income in excess of $1 billion.
However, the old narrative of Amazon as a revenue giant that struggles on profitability has started to unravel.
Net income was $2.9 billion in the third quarter, or $5.75 per share, smashing analyst expectations of $3.14 per share, according to the Refinitiv financial data company. Compare that with the same period in 2017, when net income was only $256 million, or $0.52 per share.
Those profit gains did little to comfort investors, who sold the stock heavily after both third quarter revenues and the forecast for holiday sales missed expectations. Amazon pinned the lower revenue forecast on a number of factors, including accounting changes and the timing of the Diwali holiday in India, according to a Reuters report.
Despite the shift to larger profits, Amazon has a long, long way to go if it wants to catch up to its rivals in terms of cumulative earnings, as shown by Reifman’s chart below.