Amazon sinks on revenue miss, even after 'record holiday season'

Jeff Bezos AmazonMario Tama/Getty ImagesAmazon CEO Jeff Bezos

NEW YORK CITY — Amazon reported its fourth quarter earnings Thursday after the bell.

It’s a beat on profit but a miss on revenue. First quarter revenue guidance was lower than expected, while Amazon’s cloud business, AWS, fell short of street estimates as well.

Amazon stock is down nearly 4.5% in after hours.

Here are the most important numbers:

  • EPS (GAAP): $1.54 per share vs. $1.35 per share average analyst estimate
  • Revenue: $43.7 billion vs. $44.68 billion average analyst estimate (up 22% year-over-year)
  • AWS Revenue: $3.5 billion vs. $3.6 billion average analyst estimate (up 47% year-over-year)

The revenue miss is a bit of a disappointment as expectations were high after Amazon previously said that it had a record holiday season. The company is estimated to have driven more than half of US online sales growth last year, too.

Amazon gave first quarter revenue guidance in the range of $33.25 billion and $35.75 billion, lower than the expected range of $34.52 billion to $36.95 billion.

For the full year, Amazon reported $136 billion in revenue, a 27% jump from last year’s $107 billion.

Amazon’s cloud service, AWS, continues to be the main profit driver, as it remained the company’s most profitable business. In the fourth quarter, it had $926 million in operating profit, at a solid 26% margin.

Amazon also continued to expand its fulfilment by Amazon (FBA) service, which allows third party sellers to send inventory to Amazon’s warehouses, and take advantage of its shipping service for a small fee. The number of active sellers using FBA grew 70% year-over-year, while FBA units accounted for more than 55% of total third-party unit sales.

In a prepared statement, Amazon CEO Jeff Bezos focused on the growth of its Prime membership, which gives access to free two-day shipping, streaming video content, and online storage, among many others.

“Prime members can now choose from over 50 million items with free two-day shipping — up 73% since 2015. Prime Video is now available in more than 200 countries and territories. Prime Now added 18 new cities, which means millions more members now get one and two hour delivery…And customers noticed — tens of millions of new paid members joined the program in just this past year,” Bezos said.

Amazon has been ramping up its investments lately in areas like international expansion, fulfillment centres, and video content. That will likely continue to put pressure on its profit margins goign forward. Amazon gave first quarter operating income guidance in the range of $250 million to $900 million, lower than last year’s $1.1 billion.

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