Amazon over-delivered in its Q4 earnings results big time. The online giant reported earnings of $6.47 per share vs analyst expectations of $4.03 per share. It also outperformed on revenue with $87.44 billion, up 21%, compared to market expectations of $86.02 billion.
The company said it expects Q1 revenue to range between $69 billion and $73 billion. Thanks to a record holiday shopping season, Amazon’s net income also grew 8% to reach $3.27 billion, outperforming analysts’ expectations of $2 billion.
The positive results caused shares to jump 12.2% in extended trading on Thursday and pushed the market cap value of the company to more than $1 trillion.
Cloud and Prime powered results
The positive earnings were powered partly by higher than anticipated revenue of $9.85 billion from Amazon Web Services and growth to more than 150 million Amazon Prime members from 100 million in 2018.
“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,” said Jeff Bezos, Amazon founder and CEO. “We’ve made Prime delivery faster — the number of items delivered to US customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year.”
Subscription services revenue, which includes Amazon Prime memberships, Music Unlimited, and Prime Video Channel, reached $5.24 billion for Q4, up 32%. The number of Music Unlimited subscribers grew 50%.
The company’s investments in faster one-day and same-day delivery also paid off in increased sales although the company’s shipping costs increased 43% to $12.9 billion compared to Q4 in 2018.
Independent third-party sellers – mostly small and medium-sized businesses – sold more than a billion items during the holiday season, including more than 100 million items shipped with Prime Free One-Day Delivery.
Amazon has simply reset the bar for fast delivery for its competitors in the entire retail and e-commerce sector. Its food business, made up mostly of Whole Foods grocery stores, saw a 1% decrease in revenue to $4.8 billion, highlighting the ultra-competitive nature low margins in the grocery industry.
In its “other” earnings category, mostly it’s online advertising business, Amazon recorded an impressive 41% gain, hitting $4.8 billion in revenue.
Product and service highlights
Amazon had several interesting highlights in its earnings report. For example, it said hundreds of millions of Alexa-enabled devices are now in use around the world with users interacting with the voice service billions of times weekly.
Prime Video continued to debut new programming, receiving eight Golden Globe nominations and winning best TV series or musical for Fleabag as well as best TV performance by an actress for Phoebe Waller-Bridge.
Amazon Music now has more than 55 million subscribers, growing 50% in the past year and even faster, doubling in many new markets. Its Fire TV now has more than 40 million users worldwide and BMW in Fiat Chrysler announced plans to include fire TV in their future vehicles.
Kindle authors earned more than $300 million from Kindle Direct Publishing (KDP) in 2019 and have earned more than $1.1 billion since the service launched in 2007.
During his recent trip to India, CEO Jeff Bezos Amazon pledged to invest $1 billion to help digitize traders and micro, small, and medium-sized businesses (MSMBs) across India, with the goal of bringing more than 10 million MSMBs online by 2025. Today, there are more than 550,000 sellers on the Amazon India marketplace,
With all of these earnings channels firing on all cylinders, Amazon looks poised to continue its impressive growth and earnings in the near future.
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