Amazon today reported earnings for its third fiscal quarter of 2019, including revenue of $70.0 billion, net income of $2.1 billion, and earnings per share of $4.23 (compared to revenue of $56.6 billion, net income of $2.9 billion, and earnings per share of $5.75 in Q3 2018). North American sales were up 24% to $42.6 billion, while international sales grew 18% to $18.3 billion.

Analysts had expected Amazon to earn $68.81 billion in revenue and report earnings per share of $4.62. The retail giant thus beat on revenue but missed on earnings per share. The company’s stock was up about 1% in regular trading, and down 7% in after-hours trading. Amazon gave fourth quarter revenue guidance in the range of $80.0 billion and $86.5 billion, compared to a consensus of $87.37 billion from analysts.

AWS, subscriptions, and ‘other’

Amazon Web Services (AWS) continued to be the star of the show, growing 35% in sales to $9.0 billion. But the star isn’t shining as brightly as before. In Q2 2019, AWS growth fell to 37% — the first sub-40% growth rate since Amazon started breaking out AWS numbers. We know now that wasn’t a blip — AWS growth continues to slow down. Nonetheless, AWS still accounted for about 13% of Amazon’s total revenue for the quarter. AWS is the cloud computing market leader, ahead of Microsoft Azure and Google Cloud.

Subscription services were up 34% to $5.0 billion. That would mainly constitute Amazon Prime, which the company has expanded to offer deals at places like Whole Foods.

Amazon’s “other” category, which mostly covers the company’s advertising business, was up 44% to $3.6 billion in revenue. The company knows plenty about what its customers want to buy, or even don’t want to buy, and it’s increasingly leveraging that for its advertising business. “It’s still early and what we’re focused on really at this point is relevancy — making sure that the ads are relevant to our customers, helpful to our customers,” CFO Brian Olsavsky said on the earnings call. “And to do that we use machine learning, and it’s helping us to drive better relevancy” he added.

Prime Day, annual hardware event, and Alexa

“We are ramping up to make our 25th holiday season the best ever for Prime customers — with millions of products available for free one-day delivery,” Amazon CEO Jeff Bezos said in a statement. “Customers love the transition of Prime from two days to one day — they’ve already ordered billions of items with free one-day delivery this year. It’s a big investment, and it’s the right long-term decision for customers. And although it’s counterintuitive, the fastest delivery speeds generate the least carbon emissions because these products ship from fulfillment centers very close to the customer — it simply becomes impractical to use air or long ground routes. Huge thanks to all the teams helping deliver for customers this holiday.”

Bezos talked about Prime Day last earnings report, even though it falls in Q3. Now he’s back at it again. After all, Prime Day is the largest shopping event in Amazon history, and this year sales from the two-day event (July 15 and July 16) surpassed the previous Black Friday and Cyber Monday combined. Next, Amazon is looking towards the holiday season — Q4 is naturally the company’s biggest quarter.

Arguably more important was Amazon’s annual hardware event last month, where it launched Echo Studio, Echo Glow, Echo Flex, an oven, and Echo Frames. There were also plenty of Alexa updates, including Alexa Guard, a doorbell concierge, and a multilingual mode.

As always, Alexa was mentioned many times in the company’s press release, even though Amazon is nowhere near ready to break out the voice assistant in its earnings reports. Amazon reemphasized that more than 85,000 smart home products from over 9,500 unique brands can be controlled with Alexa. Additionally, Amazon listed its new Echo devices, Fire TV products, and Fire TV apps (including today’s Apple TV release).