Global server motel, with a supermarket in the parking lot, banks $10bn profit from $233bn sales (Yes, it's Amazon)
Revenue growth appears to be slowing, though... Shares down in after-hours
Amazon closed out 2018 with a bang, well, a $72.4bn fourth quarter, according to figures released Thursday.
The Bezos Bunch said they also logged $233bn of sales that year, and banked $10.1bn in profit. Here's a summary for the quarter, ending December 31:
- Revenue of $72.4bn was up 20 per cent from last year's $60.5bn Q4 haul, beating financial analysts' expectations by $500m.
- Net Income of $3bn was was up 58 per cent from $1.9bn in the year-ago quarter.
- Earnings per share (GAAP) were $6.04, topping Wall St estimates by 39 cents.
- AWS revenues were $7.43bn on the quarter, up 46 per cent year-on-year, while operating income for the cloud biz was $2.2bn, up 63 per cent. This time last year, sales were $5.1bn and operating income was $1.35bn. That's a 29.6 per cent margin versus 26.5 per cent.
- North America net sales, for non-AWS businesses, topped $44.12bn, up 18 per cent, though the thin margins for the retail biz meant operating income was $2.23bn, up 31 per cent. Last year North American revenues in the quarter were $37.3bn and operating income was $1.7bn. That's a five per cent margin versus 4.5 per cent.
- Amazon's international biz continues to be a drag on finances, the unit shifted $20.1bn in sales, up 12 per cent, but turned a $642m loss for the quarter. This is still an improvement from the year-ago quarter when revenue was $18bn and loss was $919m.
- Amazon's "other" businesses, which is mostly online advertising, funnily enough, amounted to $3.4bn, up 95 per cent.
On the full 2018 year:
- Revenues of $232.9bn were up by 31 per cent from $177.9bn last year.
- Net income of $10.1bn was up 237 per cent from just $3bn in 2017.
- Earnings per share were $20.14, up a lot from $6.15 last year.
- Full-year AWS revenues of $25.7bn, up 47 per cent from $17.5bn a year ago. Operating income was $7.3bn, up 70 per cent from $4.3bn.
- North American operating income was $7.26bn, up 159 per cent from $2.8bn. Revenues of $141.4bn were up 33 per cent from $106.1bn last year.
- International revenues were $65.9bn, up 22 per cent, resulting though in an operating loss was $2.14bn. Last year, international revenues were $54.3bn and operating loss was $3.1bn.
Though hiring was down from previous years, Amazon said it had added a bundle of tech and research positions. In discussing the results with analysts on a conference call, Amazon execs said AWS had added a number of tech and sales positions, while CEO Jeff Bezos said earlier that Alexa had bolstered its roster of boffins.
"The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear," the Beez boasted.
"In 2018, we improved Alexa’s ability to understand requests and answer questions by more than 20 per cent through advances in machine learning, we added billions of facts making Alexa more knowledgeable than ever, developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017."
There's always some fly in the ointment, of course. Sales from Amazon's physical shops – from Whole Foods to its bookstores and Amazon Go ‒ were down three per cent, though Whole Foods saw six per cent growth in revenue when you adjusted for overlapping financial quarters. Also, Amazon's sales look impressive, but the growth is slowing: a 20 per cent increase in revenue in Q4 2018 versus 38 per cent the year before.
Despite the overall strong year and ability to convert customer spending into profit, investment analysts were disappointed with the tech titan's estimated $56-60bn Q1 2019 revenue outlook (they hoped for $61bn). That also means Amazon is expecting 10 to 18 per cent sales growth this quarter.
Wall St also expressed concern over growing shipment costs, a lack of progress in India, and an economic slowdown hitting the web giant's sales. Amazon's Q1 2019 estimated operating income is $2.3-3.3bn, while analysts expected a guesstimate of $3bn.
Amazon shares were down roughly five per cent at $1,634 apiece in after-hours trading. There's no pleasing some people. ®