Amazon Exceeded Expectations With Its Q4 2019 Results
Highlights:
→ The total revenue of Amazon for Q4 2019 has been reported as $87.44 billion exceeding the estimate of $86 billion maximum.
→ Amazon Web services have reached almost $10 billion, beating the target of $9.81 billion.
→ The final earnings per share have been reported as $6.47, crossing the projections at $4.03 per share.
→ Amazon Prime members have reached an all-time high of +150 million (+50 million since 2018)
Last week, during extended trading, Amazon’s shares grew by as much as 11%. The main driving force to this being all the projections and estimates for Q4 of 2019 given by Amazon which were later drastically exceeded, and the company made a lot of money.
The earnings report of the company shows that the market cap of the company has skyrocketed over $1 trillion. This means that Amazon is a part of the special club of companies that crossed this threshold, this includes, Microsoft, Alphabet, and Apple. In fact, the first time that Amazon reached this marked cap was in 2018.
The $87.44 billion in this quarter, indicating a 21% growth, justifies rightly the company’s moves and investments to speed up shipping and expand its network. During the last quarter, Amazon reported record-breaking numbers in terms of holiday shopping with both same-day and one-day deliveries quadrupling in size.
The international shipping costs of the company were also increased during the quarter reaching $12.8 billion. This accounted for a 43% increase from last year. When the last earnings report was released, Amazon also reported that the company would look to invest around $1.5 billion for holiday season delivery.
Even though the company increased its investments during Q4, the net income also increased during the quarter. Although analysts had estimated $2 billion for the net income, Amazon’s net income has been recorded as $3.27 billion, which is an 8% increase as compared to the last year. These numbers highlight the upward trajectory of the company.
Amazon with its excellent growth trajectory in its retail business has also shown increased sales for Amazon Cloud, which is reported to have reached a $9.95 billion – 34% increase as compared to Q4 2018. The expectations, however, were a lot closer in this domain as they were projected at $9.81 billion. Although there is an evident increase in Q4, the growth was 35% in Q3.
All of these earnings of Amazon have contributed to a $110 billion increase in the company’s market value in the e-commerce space. As noted in the report, Amazon Prime subscribers have reached an all-time high of 150 million, a 50 million bump since 2018, despite the fee increase in the interim. When the company introduced this special membership that gives users benefits but requires a monthly payment, many experts predicted it to be a fiasco.
Q1 2020 Projections
A number of US companies have stated that the virus is likely to affect their numbers. Google, on the other hand, does not have a lot of operations in China and thus, is expecting the disruptions to be minimal.
However, the investments for this quarter have been posted as under $1.5 billion. Amazon has already allocated an additional $1 billion for the Q1 of 2020. However, the company is also being realistic, and they know that these low costs won’t stick around for a long time. It is estimated that as soon as the volume of deliveries will increase and new zip codes and routes will get introduced, the prices are going to increase.
