Amazon crosses $1 trillion again after crushing holiday quarter with $87.4B in revenue

Amazon packages en route to customers in New York City. (GeekWire Photo / Taylor Soper)

Shares of Amazon rose 12 percent in after-hours trading after the company beat expectations for holiday quarter and revealed that there are 150 million Prime members.

Revenue: Amazon posted $87.4 billion in revenue, up 21 percent from the year-ago quarter. Analysts expected $86.15 billion. Total revenue for 2019 spiked 20 percent to $280.5 billion.

Profit: Amazon reported earnings per share of $6.47, crushing expectations of $4.03, and up from $6.04 last year. Operating income of $3.9 billion was $1 billion more than the company’s projections.

Stock: The earnings report jolted shares past $2,000 in after-hours trading Thursday as Amazon crossed the $1 trillion mark for market capitalization again. It reached that milestone for the first time in September 2018. There are now four $1 trillion U.S. tech companies: Apple, Alphabet, Amazon, Microsoft.

Outlook: Amazon expects Q1 sales between $69 billion and $73 billion. Operating income is projected at $3 billion to $4.2 billion, compared with $4.4 billion in Q1 2019.

Amazon Web Services: Amazon’s cloud business was up 34 percent at $9.95 billion, with $2.6 billion in operating income, continuing to help drive Amazon’s profits.

Prime: Amazon CEO Jeff Bezos, who saw his net worth surge by more than $12 billion on Thursday, announced that the company surpassed 150 million paid Prime subscribers globally after the biggest quarter in Prime history. The milestone comes less than two years after the company disclosed the number of Prime members for the first time, saying in April 2018 that it had reached 100 million Prime members globally.

Subscription services revenue, which includes Prime memberships, came in at $5.2 billion, up 32 percent.

(GeekWire Photo / Kevin Lisota)

Shipping costs: Amazon’s shipping costs have ballooned in recent years as the company expands its 1-day delivery initiative that launched this past April. During Q4, Amazon spent $12.9 billion on shipping, up 43 percent. In 2019 as a whole, Amazon spent $37.9 billion on shipping, an increase of 37 percent from 2018.

Amazon chief financial officer Brian Olsavsky previously said the company would spend $1.5 billion during its fourth quarter to roll out 1-day shipping. On Thursday he told reporters that spending came in slightly under $1.5 billion. “We are getting more efficient as we go,” Olsavsky said. He said the company expects an approximately $1 billion transportation cost penalty in Q1 related to the 1-day initiative.

Advertising: The company’s growing advertising arm doesn’t have its own category and is listed under a category called “Other.” That category brought in $4.8 billion in revenue in the quarter, up 41 percent over a year ago.

Physical stores: Amazon posted $4.4 billion in revenue for this category, which includes Whole Foods and Amazon Go stores. That’s down 1 percent.

On the call with reporters, Olsavsky said the number of online orders made via Amazon Fresh and Whole Foods doubled year-over-year. “We’re seeing a lot of success in home delivery of groceries, and that’s where a lot of the Whole Foods growth has been,” he said. Amazon in October made grocery delivery a built-in benefit of Prime membership — no longer charging an extra $15 per month, or $180 per year, for Amazon Fresh delivery on top of the $119 annual Prime fee.

Headcount: Amazon now employs 798,000 people, up 23 percent year-over-year.

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