Amazon misses, stock tanks

Jeff Bezos
Amazon CEO Jeff Bezos Michael Seto/Business Insider

Amazon just reported earnings for the fourth quarter of 2015.

It’s a miss across the board, which is driving its stock is down more than 12% in after-hours trading.

Here are the most important numbers:

  • Earnings per share (EPS): $1 vs. $1.56 estimated (GAAP).
  • Revenue: $35.75 billion, up 22% year-on-year, but short of the $35.9 billion estimated by Wall Street.

Amazon gave revenue guidance in the range of $26.5 billion and $29 billion, or up between 17% and 28% compared with first-quarter 2015. Analysts are expecting $27.65 billion.

Although Amazon missed analyst expectations, its overall sales and profitability have improved.

This was the third-straight profitable quarter for Amazon, pulling in $482 million in net profit, which is also the biggeset ever for the e-commerce company.

For the full year, revenue increased 20% to $107 billion, compared with $89 billion in 2014. Operating-cash flow went up 74% year-over-year to $11.9 billion for the past year, while free-cash flow increased $7.3 billion.

But it looks like i
nvestors were expecting another beat, since they drove up Amazon’s stock price by over 9% on Thursday afternoon, even before the company released its earnings.

Last month, Amazon indicated that it had a strong holiday season, announcing that its Prime service had a record number of units shipped, with more than 3 million new customers joining its membership program. Amazon never released exact figures for its Prime members, but CIRP recently estimated it to be 54 million, up 35% from last year.

Amazon said in its release that Prime membership, which includes free two-day shipping and access to a bunch of video and music content, grew 51% last year, and 47% in the US.

Amazon Web Services, its cloud computing service, continued to show strong growth, jumping 69% in year-over-year quarterly revenue to $2.4 billion. Its operating margin also remains healthy at 28.5%.

There were also multiple reports in the last quarter indicating that Amazon may possibly expand its logistics business across truck trailers, flight delivery, and ocean-freight services. Amazon typically stays coy about these things on earnings calls, but investors will keep an eye out for any mentions.

Here are some of the notable highlights Amazon shared in its press release:

  • Fire TV remains the No. 1 best-selling streaming media player in the US, having added over 1,000 new apps, channels, and games since September, including NBC, NBC Sports, Watch HGTV, Watch Food Network, and Watch Travel Channel.
  • The $50 Fire tablet has been the No. 1 best-selling, most gifted, and most wished-for product across all items available on since its introduction 19 weeks ago.
  • In 2015, worldwide paid Prime memberships increased 51% — 47% in the US but even faster outside the US.
  • In the fourth quarter, Prime Music streaming hours more than tripled in the US, compared with fourth-quarter 2014.
  • Amazon Web Services (AWS) announced the launch of its Asia Pacific (Seoul) Region in Korea and its plans to open a new region in Canada. The AWS Cloud is now available from 32 Availability Zones across 12 geographic regions worldwide, with another five AWS Regions — and 11 Availability Zones — in Canada, China, India, Ohio, and the UK expected to be available in the coming year.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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