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Technology Stocks : Amazon.com, Inc. (AMZN)
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From: Glenn Petersen2/2/2021 8:20:55 PM
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Amazon blows past estimates for holiday quarter, sets record with $125.6B in revenue

BY TAYLOR SOPER
GeekWire
on February 2, 2021 at 2:15 pm

Amazon crushed expectations for its holiday quarter, beating estimates with an all-time high of $125.6 billion in sales.

The fourth quarter earnings report also included news that CEO Jeff Bezos will step down in the third quarter. Amazon Web Services chief Andy Jassy will replace Bezos, who founded Amazon 27 years ago. Bezos will become executive chairman.

Amazon eclipsed $100 billion in quarterly revenue for the first time. The company recorded a whopping $386 billion in annual revenue last year.

The Seattle tech giant has surged amid the pandemic as consumers turn to online shopping and more people rely on its cloud arm, Amazon Web Services. Amazon also pushed its annual Prime Day shopping bonanza to October this year, providing another boost for its Q4 sales.

Amazon spent another $4 billion on COVID-19-related costs during the fourth quarter and hired hundreds of thousands of workers. But it was still able to post earnings per share of $14.09, nearly double compared to analyst estimates.

Here’s a quick breakdown of the company’s financials from the quarter.

Revenue: Amazon posted $125.6 billion in revenue, up 44% from the year-ago quarter. Analysts expected $119.6 billion.

Profit: Amazon reported net income of $7.2 billion, or earnings per share of $14.09, beating expectations of $7.20, and up from $6.47 last year. Operating income came in at $6.9 billion, up from $6.2 billion in the third quarter, and up from $3.9 billion in the year-ago quarter.

Stock: Shares were up slightly in after-hours trading. The company’s stock is up more than 60% over the past 12 months and was trading at around $3,380/share on Tuesday before the market closed. Amazon’s market capitalization has risen to $1.7 trillion, right behind Microsoft. They trail Apple ($2.2 trillion) for the title of most valuable publicly-traded U.S. company.

Outlook: Amazon expects Q1 2021 sales between $100 billion and $106 billion. Operating income is projected at $3 billion to $6.5 billion. COVID-19-related costs are expected to be $2 billion.

Amazon Web Services: Amazon’s cloud business was up 28% at $12.7 billion, with $3.6 billion in operating income, continuing to help drive Amazon’s profits. The AWS revenue growth rate was down by 6% year-over-year.

Shipping costs: Amazon’s shipping costs have ballooned in recent years as the company aims to speed up delivery with its push for one-day shipping. During Q4, Amazon spent $21.4 billion on shipping, up 67%. Amazon grew its fulfillment center footprint by 50% in 2020.

Physical stores: The category, which includes Whole Foods and Amazon Go stores, posted revenue of $4 billion, down 7%.

Advertising: The company’s growing advertising arm doesn’t have its own category, but makes up a majority of the revenue under a category called “Other.” That category surged in Q4, bringing in $7.9 billion in revenue for the quarter, up 64% from a year ago. Amazon CFO Brian Olsavsky said Prime Day and a recovery in advertising toward the end of the year helped drive revenue for the Other category.

Headcount: Amazon now employs 1.3 million people, up 63% year-over-year. That figure does not include seasonal and contract workers. It hired more than 170,000 people in Q4 and 500,000 people total in 2020.

Prime: Subscription services revenue, which includes Prime memberships, came in at $7 billion, up 34%. Amazon said it had more than 150 million Prime members a year ago; it has not provided an updated number since then. Prime membership sign-ups spiked during the holiday quarter, according to a recent report from CIRP.

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