Published: Sun, February 03, 2019
Business | By Eloise Houston

Amazon profit jumps on strong holiday quarter

Amazon profit jumps on strong holiday quarter

Total Q4 revenue. $72.4 billion. That's $1.7 billion more than the 2017 holiday quarter, a 23 percent increase.

For the full year, Amazon's net income reached $10.1 billion, or $20.14 per diluted share, compared with a net income of $3 billion, or $6.15 per diluted share, in 2017.

Amazon, which recently surpassed Microsoft as the most valuable company in the USA, reported net income of $3.03 billion during the last three months of 2018.

This expansive customer base has lured merchants to sell goods on the company's marketplace, to the point where more than half of products sold on Amazon come from third-parties. This compares to $3 billion, or $6.15 per share in 2017.

Net income increased to $3.0 billion, or $6.04 per diluted share, compared with net income of $1.9 billion, or $3.75 per diluted share, past year and easily topping Street estimates of $5.65 a share.

Amazon's digital ad business continued to grow well in the quarter, and it is working with big brands on improving tools and features, chief financial officer Brian Olsavsky said during an earning call with analysts.

Percentages are a percentage of overall revenue. Some of this sequential deceleration can be explained by the fact that this was the first quarter in which Amazon was up against a full period of Whole Foods sales in the year-ago quarter. He added, "I will be interested to see how AWS's recently announced AI PaaS and SaaS services fare as they appear quite compelling". Advertising accounts for most of Amazon's "Other" category, which is not an official business segment.

Net sales in North America, its biggest market, jumped 18.3 per cent to US$44.12-billion in the reported quarter.

"Fourth quarter results are expected to reveal an ad player that is on its way to eventually challenge Facebook for the No. 2 spot", eMarketer analyst Monica Peart said in a statement ahead of the earnings announcement.

"Alexa was very busy during her holiday season", Bezos said.

"Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to past year", he said.

The number of devices with Alexa built-in more than doubled in 2018 to over 150.

Alexa was fielding a wild number of requests over the holiday season, and little wonder - Amazon sold more Echo Dots than any other product in 2018.

"History shows that Amazon has had limited success in exceeding Street expectations for revenue in 4Q, likely due to the lack of visibility at the time guidance is given, and difficulties in forecasting a high amount of sales volume in such a small window", Suntrust analysts wrote in a note to clients. Analysts are expecting revenue of $60.96 billion.

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