By Jeff Domansky, Feb 3, 2021
The record Q4 2020 earnings report for Amazon crossed the $100 billion level for the first time, nearly eclipsing the most important news of the day – founder Jeff Bezos’ decision to step down as CEO.
Bezos used Amazon’s earnings report to release the record results and announce his decision to step down as CEO this year. He will become Executive Chairman and focus on “new products and early initiatives.” Current Amazon Web Services CEO Andy Jassy will take over in Q3.
A yawn? Hardly!
“If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive,” Bezos wrote. “When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now, I see Amazon at its most inventive ever, making it an optimal time for this transition.”
In the investor earnings call, Amazon CFO Brian Olsavsky said the company has a smooth transition plan in place. Bezos isn’t leaving but instead getting “a new job” to lead the company strategically into the future.
“He will be involved in many large one-way-door issues, as we say, one-way doors meaning the more important decisions things like acquisitions, things like strategies, and going into grocery and other things,” Olsavsky emphasized.
Record Amazon Q4 financial results
The record financial results provide a fitting exit from day-to-day oversight for Bezos.
“Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more,” said Bezos.
Here’s a quick summary of the record earnings, which are so substantial and so representative of our times, resulting from accelerated demand and growth during and despite the terrible COVID-19 pandemic:
- $125.56 billion in revenue compared with $87.4 billion in Q4 2019; +42% after foreign-exchange adjustments
- Operating income reached $6.9 billion vs $3.9 billion in the previous year
- Net income increased to $7.2 billion, or $14.09 per diluted share, compared with net income of $3.3 billion, or $6.47 per diluted share in fourth-quarter 2019
- Amazon’s cloud computing business grew 28% to $12.7 billion from $9.95 billion last year
- “Other” revenue, mostly advertising, reached $7.9 billion in Q4, up 64%
- Record holiday sales by independent small businesses on Amazon’s marketplace growing 50% to reach $4.8 billion.
Other company records tumbled
Other company records continued to fall as well with the record earnings. The company hired 175,000 new employees compared to 50,000 in Q4 last year. It now has 1.3 million employees worldwide, an increase of 63% in the past 12 months.
The cost of shipping goods to customers jumped 67% as costs reached $27.5 billion, reflecting the dramatic increase in sales and deliveries to existing and new customers.
Amazon delivered more than a billion toys, home, fashion, electronics, beauty, and personal care products to customers worldwide during the 2020 holiday season.
It now has an estimated 142.5 million Amazon Prime members who pay annual fees for a basket of services, including fast, free deliveries, video, and music services, and much more.
More company records ahead?
The number of other records shattered, and innovations launched grew long and expect to continue in 2021.
Amazon predicts Q1 2021 net sales will reach between $100.0 billion and $106.0 billion, growing between 33% and 40% over Q1 2020.
Operating income should hit between $3.0 billion and $6.5 billion, compared with $4.0 billion in the first quarter of 2020. This despite the pandemic’s ongoing impact and an expected $2 billion in costs related to COVID-19.
The company said last year in the UK, it delivered more than six million COVID-19 testing kits free of charge and has offered to support the new Biden administration’s US COVID relief and vaccination programs.
No, Jeff Bezos isn’t leaving. He’s merely freeing up even more time to lead the company strategically and continue to press forward with innovations in the future.
For past Amazon coverage, check out our following recent posts:
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