On Thursday, shares of Amazon increased by about 11% in protracted trading after smashing earnings expectations for the fourth quarter.
The market cap of the company soared above $1 trillion after hours on the back of the powerhouse earnings report. By doing so, it joined the list of companies such as Apple, Alphabet, and Microsoft, which have all crossed the trillion-dollar mark.
Here are some key numbers-
- Earnings per share:$6.47 per share vs. expectations of $4.03 per share, as per analysts surveyed by Refinitiv
- Revenue:$87.44 billion vs. expectations of $86.02 billion, according to Refinitiv
- Amazon Web Services:$9.95 billion vs. expectations of $9.81 billion, as per FactSet
Revenue increased by 21%, resulting in $87.44 billion for the quarter, which stipulates that the company’s investments in faster shipping are resulting in more purchases. Last quarter, Amazon claimed that customers shopped at record levels during the holiday season and stated it multiplied by four times both one-day and same-day deliveries over the period.
The company also provided upbeat guidance for the first quarter, stating it now wishes to report revenue between $69 billion and $73 billion. Brian Olsavsky, Amazon CFO said to Josh Lipton from CNBC that the company doesn’t “have any visibility” on whether the coronavirus is going to hit its first-quarter results. Many U.S. companies have issued a warning regarding the deadly virus that could affect their business, while others such as Google have restricted and limited operations in China, which is the epicenter of the lethal coronavirus and where maximum cases have been reported.
In the earnings release, Jeff Bezos, Amazon’s CEO said “more people joined Prime this quarter than ever before” and that the company now has registered more than 150 million paid Prime members around the world. Amazon released the last update regarding Prime subscribers in April 2018, claiming it had more than 100 million members in the program.
On the earnings call, Olsavsky pointed out that costs linked with launching the program came in “slightly under” $1.5 billion in the fourth quarter. Amazon is going to spend $1 billion more on the initiative in the first quarter and “again in [the second quarter] we’ll start to lap this,” Olsavsky added. He is expecting the costs to become more efficient as delivery volume increases alongside new transportation modes, such as additional routes and zip codes.
Despite Amazon’s increasing investments, the net income of the company bounced back during the quarter. Its net income increased 8% year over year to $3.27 billion, which surpassed expectations of analysts of $2 billion. Amazon’s net income slid 26% during the third quarter as a result of costs tied to ramping up one-day delivery.
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