Date
22 September 2018
An Amazon fulfilment facility in Everett, Massachusetts. The company's fast delivery has helped win over more holiday shoppers. Photo: Reuters
An Amazon fulfilment facility in Everett, Massachusetts. The company's fast delivery has helped win over more holiday shoppers. Photo: Reuters

Amazon reports US$1.9 bln quarterly profit, its largest ever

Amazon.com reported on Thursday a profit of US$1.9 billion for the three months to December, the company’s highest ever quarterly income, on strong sales growth and a tax boost.

The world’s largest online retailer announced that profit more than doubled in the fourth quarter from the year-earlier figure of US$749 million, as sales rose 38 percent to US$60.5 billion.

The figures topped market expectations, helping Amazon shares surge more than 6 percent in after-hours trading to US$1,476.

Noting that the e-commerce giant’s quarterly profit topped US$1 billion for the first time, the Wall Street Journal said the result reflects the firm’s push toward stronger fiscal discipline even as it broadens its ambitions beyond online retailing.

Amazon has long plowed most of the money it makes to build products, roll out services and construct warehouses, but it is no longer racking up a string of losses.

The fourth-quarter result was helped by a tax benefit of US$789 million after the US government passed a new tax bill in December.

Amazon also attributed the record profit to strong performances by its cloud-computing division, growth in advertising services such as product placement in search results and better efficiency at its warehouses amid record holiday sales, the Journal reported.

“There’s certainly constant cost reduction and productivity efforts underway in many areas of the company, but specifically in our warehouses,” the paper cited Brian Olsavsky, Amazon’s chief financial officer, as saying.

In the December quarter, Amazon Web Services division saw its sales rise 45 percent to US$5.11 billion. 

The cloud unit has become a major factor in keeping Amazon in the black, the Journal pointed out. 

Meanwhile, the company’s fast delivery, like its two-hour Prime Now service, has helped win over holiday shoppers eager to avoid the crowds of big box retailers, Reuters noted.

Prime saw more than 4 million sign-ups in one week alone in the fourth quarter, and revenue from subscription fees grew 49 percent to US$3.2 billion.

Perhaps the surprise star of the past quarter was Amazon’s voice aide Alexa, embedded in the company’s Echo speakers and Fire TV players, Reuters noted.

Millions of Amazon customers ordered goods by voice with Alexa in the past year, CFO Olsavsky was quoted as saying on a call with reporters.

“Our 2017 projections for Alexa were very optimistic, and we far exceeded them,” Jeff Bezos, Amazon’s founder and chief executive, added in a statement.

“We don’t see positive surprises of this magnitude very often — expect us to double down.”

Amazon is said to now command roughly three quarters of the smart-speaker market with its Echo devices.

For the current quarter to March, the e-commerce giant projected sales in the range of US$47.75 billion to US$50.75 billion, which would represent increase of up to 42 percent from a year ago.

Amazon shares have gained about 65 percent in value over the past twelve months, helping propel Bezos to the No.1 spot on the list of the world’s super-rich.

– Contact us at [email protected]

RC

EJI Weekly Newsletter

Please click here to unsubscribe