Amazon (Nasdaq: AMZN) last week reported its fourth quarter results, which yet again surpassed all estimates. Its unsurpassed excellence in e-commerce as well as the cloud keeps it in perpetual high gear. The most exciting news from the company, however, is that Amazon is getting into the health insurance business.
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Amazon’s Financials
Amazon ended the year with net sales growing 31% to $177.9 billion. Net income increased 25% to $3 billion or $6.15 per diluted share. Operating income decreased 2% to $4.1 billion.
Amazon’s fourth quarter revenues grew 38% over the year to $60.5 billion, ahead of the market’s expectations of $59.83 billion. Net income increased 1.5 times to $1.9 billion or $3.75 per share from $749 million or $1.54 per share a year ago.
Operating income increased 69% to $2.1 billion, compared with $1.3 billion a year ago.
By segment, net product sales increased 35% to $41.3 billion and net service sales increased 46% to $19.1 billion.
AWS revenues grew 46% over the year to $5.1 billion or about 8.4% of total revenue and beat estimates of $4.97 billion. AWS generated operating income of $1.35 billion, 64% of the total operating income of the company. According to KeyBanc analysts, AWS lost market share to Azure in the fourth quarter. From 68%, AWS share slipped to 62%, while Azure’s share increased from 16% to 20% and Google’s share increased from 10% to 12%.
Revenue from subscription services like Prime increased 49% to $3.2 billion. Revenue from online stores grew 20% to $35.4 billion while revenue from physical stores, chiefly from its stores from the Whole Foods acquisition, was $4.5 billion, up from $1.3 billion in the third quarter. Revenue from third party seller services including commission, fulfillment, and shipping fees grew 41% to $10.5 billion.
For the first quarter, Amazon expects sales to grow 34%-42% to $47.75-$50.75 billion versus analyst estimate of $48.6 billion. Operating income for the quarter is expected to be $300 million-$1 billion below analyst estimate of $1.5 billion.
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