Amazon holiday quarter profit doubles
The e-commerce colossus said its net sales climbed to $137 billion, and its profit benefited greatly from a return on investment in electric vehicle maker Rivian, which went public in November.
Amazon shares were up some 14 percent in after-hours trading on Feb. 3, drawing in investors eager for some good news after shares tanked in Facebook parent Meta.
Amazon’s Chief Financial Officer Brian Olsavsky estimated Amazon incurred about $4 billion in costs related to supply-chain and labor issues. And he said that the surging Omicron variant resulted in workers calling out sick, hurting productivity.
Amazon has been a big pandemic-era winner but it is particularly exposed to the supply chain headaches, labor churn and inflation that have come to weigh on people’s lives and business’ ability to make money.
“Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic,” CEO Andy Jassy said in an earnings statement.
Amazon said it had its “biggest-ever Black Friday to Cyber Monday holiday shopping weekend.” The company also noted that its Amazon Web Services unit had inked big cloud computing deals with Nasdaq, Meta and others.
AWS generated $17.78 billion in revenue in the period, 40 percent more year-on-year.
This came as Google parent Alphabet and Apple have posted whopping profits this earnings season, although Facebook was battered by markets - losing some $200 billion in value - after disappointing results that cast doubts about its future.
Analysts remained subdued on the earnings, which included an $11.8 billion boost from Amazon’s Rivian investment.
“Amazon managed to beat on the top and bottom lines despite softer growth trends for e-commerce this holiday quarter, which also weighed on growth in the high margin ads business,” said Insider Intelligence analyst Andrew Lipsman.
“The one clear bright spot for the core business was the continued acceleration in AWS to help bolster a bottom line,” he added.
In the fourth quarter, Amazon’s operating profit, a key indicator of profitability, came in at $3.5 billion, half what it was a year ago.
In the coming months, news is expected on the efforts of workers to organize unions at sites in New York and Alabama, either of which would be the first at an Amazon US warehouse.
Also, consumers will see the price go up for Amazon’s Prime membership in the United States from $12.99 to $14.99 per month with the annual rate going from $119 to $139 - the first increase since 2018.
For its part, Apple reported record $124 billion quarterly revenue last week, despite a global chip pinch and shifting impacts of the pandemic that have weighed down other big tech players.
The supply chain mess that has disrupted the making and delivery of products to consumers is not disappearing, but Apple said it expected less impact in the coming months.
But Facebook’s parent firm Meta suffered on Feb. 3 a plunge in stock value that was comparable to the size of New Zealand’s economy.
In addition to costs of big investments on its metaverse vision for the internet and trouble for its core ads business, the firm predicted slower growth and even reported its first dip in daily users globally on the signature Facebook platform.