Amazon crushes Q4 earnings; profit nears $1.9 billion
Amazon reported better-than-expected fourth quarter profit and revenue on Thursday, fueled by strong demand for its fast-growing cloud services business (AWS) and a big increase in online holiday shopping.
The online giant’s net income jumped to $1.86 billion, or $3.75 per share, in the quarter ended Dec. 31, from $749 million, or $1.54 per share, in the year-ago period. The results include a tax benefit of about $789 million related to the recently passed U.S. tax law. Excluding one-time items, the company earned $2.16 per share. Analysts were expecting a profit of $1.85 per share. It was the company’s 11th straight quarter of positive net income and the largest in its history.
Net sales increased 38.2% to $60.5 billion, from $43.74 billion a year earlier. Analysts had been expecting $59.83 billion. Net sales in North America surged 42.2% to $37.30 billion.
Amazon’s operating income increased 69% to $2.1 billion in the fourth quarter, up from $1.3 billion last year.
Amazon’s lucrative cloud services business, AWS, continues to hold its place as the company’s fastest growing and most profitable division. AWS’ revenue jumped 44.6% to $5.11 billion in the quarter, beating estimates of $5 billion. It generated $1.3 billion in operating income, and accounted for 64% of Amazon's total operating income for the quarter.
Amazon’s total operating expenses increased 37.3% to $58.33 billion as it continues to invest in its warehouse and delivery capabilities, expand Prime and create original video content.
In a short statement, Amazon founder and CEO Jeff Bezos highlighted the success of Alexa, Amazon's voice-controlled device, and suggested that the company would up its investment in the area.
"Our 2017 projections for Alexa were very optimistic, and we far exceeded them,” said Bezos. “We don’t see positive surprises of this magnitude very often — expect us to double down. We’ve reached an important point where other companies and developers are accelerating adoption of Alexa. There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers.”
Analyst Neil Saunders, managing director of GlobalData Retail, commented that while Amazon has grown sharply, it is still nowhere near its potential. He cited categories, including home and apparel, where it is underpenetrated and, with tweaks, should be able to make further gains.
“There are markets around the world, like Australia, where Amazon is just getting started and has significant scope to boost sales,” Saunders said. “There are areas, like healthcare, that it is seeking to disrupt in the future. And there is Whole Foods, where some progress has been made - but which has yet to feel the full force of Amazon's innovative approach.”
But he added a cautionary note.
“Amazon is now rapidly moving to a company that supports consumers across multiple aspects of their lives,” Saunders said. “As much as this maximizes growth opportunities, it also comes with two inherent dangers. One of these is the increased risk of regulatory intervention and oversight. The second is a backlash from consumers who could become concerned about Amazon's power.”
Amazon included long list of annual highlights with its four quarter results. It said more than five billion items were shipped with Prime worldwide in 2017, and that more new paid members joined Prime in 2017 than any previous year — both worldwide and in the U.S. (Amazon does not disclose specific numbers.)
Echo Dot and Fire TV Stick were the top selling items across all of Amazon last, the company reported. Amazon said it sold “tens of millions of Alexa-enabled devices” worldwide in 2017.
For the full year, Amazon’s net sales increased 31% to $177.9 billion, up from with $136.0 billion in 2016. Operating income decreased 2% to $4.1 billion. Net income was $3.0 billion, or $6.15 per diluted share, compared with net income of $2.4 billion, or $4.90 per diluted share, in 2016.
The online giant’s net income jumped to $1.86 billion, or $3.75 per share, in the quarter ended Dec. 31, from $749 million, or $1.54 per share, in the year-ago period. The results include a tax benefit of about $789 million related to the recently passed U.S. tax law. Excluding one-time items, the company earned $2.16 per share. Analysts were expecting a profit of $1.85 per share. It was the company’s 11th straight quarter of positive net income and the largest in its history.
Net sales increased 38.2% to $60.5 billion, from $43.74 billion a year earlier. Analysts had been expecting $59.83 billion. Net sales in North America surged 42.2% to $37.30 billion.
Amazon’s operating income increased 69% to $2.1 billion in the fourth quarter, up from $1.3 billion last year.
Amazon’s lucrative cloud services business, AWS, continues to hold its place as the company’s fastest growing and most profitable division. AWS’ revenue jumped 44.6% to $5.11 billion in the quarter, beating estimates of $5 billion. It generated $1.3 billion in operating income, and accounted for 64% of Amazon's total operating income for the quarter.
Amazon’s total operating expenses increased 37.3% to $58.33 billion as it continues to invest in its warehouse and delivery capabilities, expand Prime and create original video content.
In a short statement, Amazon founder and CEO Jeff Bezos highlighted the success of Alexa, Amazon's voice-controlled device, and suggested that the company would up its investment in the area.
"Our 2017 projections for Alexa were very optimistic, and we far exceeded them,” said Bezos. “We don’t see positive surprises of this magnitude very often — expect us to double down. We’ve reached an important point where other companies and developers are accelerating adoption of Alexa. There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers.”
Analyst Neil Saunders, managing director of GlobalData Retail, commented that while Amazon has grown sharply, it is still nowhere near its potential. He cited categories, including home and apparel, where it is underpenetrated and, with tweaks, should be able to make further gains.
“There are markets around the world, like Australia, where Amazon is just getting started and has significant scope to boost sales,” Saunders said. “There are areas, like healthcare, that it is seeking to disrupt in the future. And there is Whole Foods, where some progress has been made - but which has yet to feel the full force of Amazon's innovative approach.”
But he added a cautionary note.
“Amazon is now rapidly moving to a company that supports consumers across multiple aspects of their lives,” Saunders said. “As much as this maximizes growth opportunities, it also comes with two inherent dangers. One of these is the increased risk of regulatory intervention and oversight. The second is a backlash from consumers who could become concerned about Amazon's power.”
Amazon included long list of annual highlights with its four quarter results. It said more than five billion items were shipped with Prime worldwide in 2017, and that more new paid members joined Prime in 2017 than any previous year — both worldwide and in the U.S. (Amazon does not disclose specific numbers.)
Echo Dot and Fire TV Stick were the top selling items across all of Amazon last, the company reported. Amazon said it sold “tens of millions of Alexa-enabled devices” worldwide in 2017.
For the full year, Amazon’s net sales increased 31% to $177.9 billion, up from with $136.0 billion in 2016. Operating income decreased 2% to $4.1 billion. Net income was $3.0 billion, or $6.15 per diluted share, compared with net income of $2.4 billion, or $4.90 per diluted share, in 2016.