Amazon today reported earnings for its fourth fiscal quarter of 2018, including revenue of $72.4 billion, net income of $3.0 billion, and earnings per share of $6.04 (compared to revenue of $60.5 billion, net income of $1.86 billion, and earnings per share of $3.75 in Q4 2017). The fourth quarter is the biggest and most important for Amazon because of holiday sales.
Analysts had expected Amazon to earn $71.9 billion in revenue and report earnings per share of $5.67. The retail giant thus handily beat expectations. The company’s stock was up 3 percent in regular trading, but largely flat in after-hours trading. Amazon gave first quarter revenue guidance in the range of $56 billion and $60 billion, compared to a consensus of $60.96 billion from analysts.
“Alexa was very busy during her holiday season. 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 last year,” Amazon CEO Jeff Bezos said in a statement. “The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear. In 2018, we improved Alexa’s ability to understand requests and answer questions by more than 20% through advances in machine learning, we added billions of facts making Alexa more knowledgeable than ever, developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017. We’re energized by and grateful for the response, and you can count on us to keep working hard to bring even more invention to customers.”
Bezos may have talked up Alexa, but Amazon is nowhere near ready to break the voice assistant out in its earnings reports. Alexa is simply contributing to overall Amazon retail sales, which is of course the company’s main revenue driver. North American sales were up 18 percent to $44.1 billion, while international sales grew 15 percent to $20.8 billion.
Amazon Web Services (AWS) continued to be the star of the show, jumping 45 percent in sales to $7.4 billion. AWS thus accounted for about 10 percent of Amazon’s total revenue for the quarter. AWS is the cloud computing market leader, ahead of Google Cloud and Microsoft Azure.
Subscription services were up 25 percent to $3.96 billion. That would be Amazon Prime, which the company is expanding to offer deals at places like Whole Foods.
Amazon’s “other” category, which mostly comprises of the company’s advertising business, jumped 95 percent to $3.4 billion in revenue. The company knows plenty about what its customers want to buy, or don’t even want to buy, so it’s no surprise its advertising business is booming.
This was the quarter that Amazon ended its search for a “second headquarters”(HQ2) in North America, first announced in September 2017. Fourteen months later, Amazon split HQ2 across Queens, New York and Arlington, Virginia. How that move will impact the company over the next few quarters, if at all, remains to be seen.