Saturday, 23 February, 2019

Amazon scores stellar Q4, fueled by 45% cloud-biz growth

Amazon wage hike pays off as it reveals record profits 'Alexa was very busy': Amazon reports record profits and strong holiday season
Priscilla Morrison | 03 February, 2019, 14:42

Some of this sequential deceleration can be explained by the fact that this was the first quarter in which Amazon was up against a full period of Whole Foods sales in the year-ago quarter. Revenue for the unit surged 45.3 percent to $7.43 billion, beating an average estimate of $7.26 billion. But its grand plans were thrown into chaos after the country implemented new e-commerce regulations, which some analysts believe could cut its growth in the market by as much as half this year.

"That's wildly concerning", said Tom Forte, an analyst at DA Davidson & Co.

The guidance includes two percentage points of negative impact from changes in currency exchange rates.

Amazon's fourth-quarter revenue rose 20% year over year, to $72.4 billion.

Amazon also heightened its spend on marketing going through AWS over the last few months, said Dave Fildes, Amazon's director of investor relations.

The big picture: Amazon revealed that during the holiday season, tens of millions of customers started Prime free trials or started paid memberships.

More customers signed up for Prime worldwide in 2018 than ever before.

The company forecast first-quarter operating income of $2.3 billion to $3.3 billion, in line with projections for $2.99 billion. In other words, Amazon's earnings per share increased 274% in 2018. Analysts are expecting revenue of $60.96 billion. Its fourth-quarter profit was just below the earnings the company recorded for the entire year in 2017.

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Amazon's healthy growth is still the envy of the retail world, but its slower revenue growth - which was as high as 43 percent in 2018 - does signal a broader shift for the company.

The company forecast net sales of between $56 billion and $60 billion for the first quarter, missing the analyst average estimate of $60.77 billion, according to IBES data from Refinitiv.

"Alexa was very busy during her holiday season".

Amazon's profits were up dramatically year-over-year as well.

Net income increased to $3.0 billion in the fourth quarter, or $6.04 per diluted share, compared with net income of $1.9 billion, or $3.75 per diluted share, in fourth quarter 2017. And advertising continued to be one of the brightest spots for the company, with $3.4 billion posted in its "other" category, which is mostly attributed to ad sales, marking an increase of 95 percent year over year. Amazon in October pledged to pay all of its warehouse employees at least $15 an hour, while eliminating some bonuses and stock awards. The cost of stowing, packing and delivering goods increased 12 percent in the holiday quarter to $10 billion, in line with online sales growth of 12.5 percent.

The midpoint of the revenue-growth guidance, 14 percent, would represent the slowest quarterly growth at Amazon since at least 2012. If you factor in inflation, Walmart reached the milestone in 36 years, which is still more than a decade longer than Amazon.

Bezos pointed to the Amazon-branded Echo speakers that are at the heart of the new strategy.

Boxes in an Amazon fulfillment center.

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