Amazon reported its earnings for its fiscal fourth quarter on Thursday after the bell.
They were a huge beat across the board, and the stock was up about 11%, or $203, in after-hours trading.
Here are the most important numbers:
- Earnings per share: $6.47 versus expectations of $4.04 per share.
- Revenue: $87.4 billion versus expectations of $86.0 billion.
The results show Amazon's heavy investment over the past year is paying off in a big way, with its revenue growth bouncing back to 21% year over year and earnings far exceeding Wall Street expectations. Amazon spent about $3 billion last year to shorten its standard delivery time to a single day and grow its AWS cloud business — but Thursday's results show its spending had far less influence on its profitability than the Street had anticipated.
Amazon Chief Financial Officer Brian Olsavsky said during a press call on Thursday that the company spent less than the $1.5 billion expected during the fourth quarter on quicker delivery because it became smarter with how it uses its shipping infrastructure. Still, the quicker delivery program resulted in a record shipping cost of $12.9 billion for the quarter, up 43% year over year.
"We are getting more efficient, both in our transportation and delivery methods and also in our warehouses," Olsavsky said.
If the company keeps these gains through market open on Friday, Amazon stands to surpass a $1 trillion market capitalization. Amazon reached the $1 trillion milestone for the first time in 2018 but saw its stock underperform the broader market over the past year as investors grew concerned over its heightened spending and AWS's slowing growth.
The investments are leading to more Prime members as well. Amazon CEO Jeff Bezos said in the earnings statement that the company now has more than 150 million Prime subscribers — less than two years after disclosing that it had 100 million Prime members worldwide.
"Prime membership continues to get better for customers year after year. And customers are responding — more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world," Bezos said in a statement.
Amazon's AWS cloud unit had revenue of $9.9 billion for the quarter, up 34% from the year-ago period. That also beat street estimates of $9.8 billion. The 34% growth rate, however, is the weakest year-over-year revenue growth since Amazon started disclosing the unit's revenue in 2015, signaling the effects of growing competition from rivals like Microsoft and Google.
First-quarter revenue guidance came in the range of $69 billion to $73 billion, close to the $71.6 billion Wall Street estimate.
Amazon's physical-store sales, which includes the Whole Foods segment, dropped 1% to $4.4 billion in sales. The "other" segment, which largely consists of its advertising business, grew 41% to $4.8 billion.
