22 January 2020
Amazon is facing some uncertainty in the Indian market due to new rules on foreign e-commerce players. Photo: Reuters
Amazon is facing some uncertainty in the Indian market due to new rules on foreign e-commerce players. Photo: Reuters

Amazon quarterly results top estimates but outlook falls short

E-commerce and tech giant Amazon on Thursday reported record holiday sales and profit, but disappointed the market as it gave muted guidance for the current quarter. 

The company posted a 63 percent jump in net income to US$3 billion for the fourth quarter of 2018, ahead of analysts’ estimates, Reuters reports.

Sales rose 20 percent, and a record number of shoppers signed up for the company’s loyalty club Prime.

Revenue for Amazon Web Services, the company’s cloud computing business, surged 45 percent.

However, the firm’s forecast for overall sales in the first quarter of 2019 missed Wall Street expectations, as new regulations in India created uncertainty around one of its key growth markets.

Under new Indian rules that took effect on Feb. 1, foreign e-commerce companies are barred from selling products via vendors in which they have an equity interest.

Brian Olsavsky, Amazon’s chief financial officer, said on a call with reporters, that the “situation in India is a bit fluid right now.”

“There’s a bit of uncertainty,” he said, adding that Amazon’s goal is to minimize the impact on its customers and sellers. “India remains a good long-term opportunity,” he said.

Amazon began removing a wide array of products from its India website late on Thursday to comply with the new foreign investment curbs.

The company forecast net sales of between US$56 billion and US$60 billion for the first quarter, missing analysts’ average estimate of US$60.77 billion, according to IBES data from Refinitiv.

The guidance includes two percentage points of negative impact from changes in currency exchange rates, Olsavsky said.

Olsavsky also stressed that 2018 was light on investments relative to prior years.

He also said that the operating profit margin for Amazon Web Services would move around a bit. Revenue for the unit was US$7.43 billion in the fourth quarter, beating estimates of US$7.26 billion.

Overall, net sales for the fourth quarter were US$72.38 billion, beating analysts’ average estimate of US$71.87 billion on the back of a strong holiday season.

Amazon said tens of millions of shoppers signed up for Prime during the season, helping boost revenue from subscription fees 25 percent to US$4 billion. The company has more than 100 million Prime members globally.

Ad sales and “other” revenue jumped 95 percent to $3.4 billion in the fourth quarter.

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