Amazon reported earnings way ahead of Wall Street estimates, and the stock is surging

MANDEL NGAN/AFP via Getty ImagesAmazon CEO Jeff Bezos speaks after receiving an award from the International Astronautical Federation at an event in Washington, D.C., on October 22, 2019.
  • Amazon’s fourth quarter earnings was a huge beat across the board, driving its stock up more than 11% in after hours trading.
  • Amazon CEO Jeff Bezos said in the earnings report that the company now has over 150 million Prime members, just two years after saying it had 100 million subscribers.
  • The surge in stock on Thursday could bring the company back across the $US1 trilion market cap.
  • Visit Business Insider’s homepage for more stories.

Amazon reported its fiscal fourth quarter earnings Thursday after the bell.

It’s a huge beat across the board and the stock is up roughly 11% in after hours trading.

Here are the most important numbers:

  • EPS: $US6.47 vs. expectations of $US4.04 per share
  • Revenue: $US87.4 billion vs. expectations of $US86.0 billion

The results show Amazon’s heavy investment over the past year is paying off in a big way, with its revenue growth bouncing back to 21% year-over-year and earnings far exceeding street expectations. Amazon spent roughly $US3 billion last year in shortening its standard delivery time to a single day and growing its AWS cloud business – but Thursday’s results show its spending had far less impact on its profitablity than the street had anticipated.

Amazon’s CFO Brian Olsavsky said during a press call on Thursday that the company spent less than the $US1.5 billion expected during the fourth quarter on quicker delivery, as it became smarter with how it uses its shipping infrastructure. Still, the quicker delivery program resulted in record shipping cost of $US12.9 billion for the quarter, up 43% year-over-year.

“We are getting more efficient, both in our transportation and delivery methods, and also in our warehouses,” Olsavsky said.

If the company keeps these gains through market open on Friday, Amazon stands to surpass a $US1 trillion market cap. Amazon reached the $US1 trillion milestone for the first time in 2018 but saw its stock underperform the broader market over the past year, as investors grew concerned over its heightened spending and AWS’s slowing growth.

The investments are leading to more Prime members as well. Amazon CEO Jeff Bezos said in the earnings statement that the company now has over 150 million Prime subscribers – less than two years after disclosing that it had 100 million Prime members worldwide.

“Prime membership continues to get better for customers year after year. And customers are responding – more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” Bezos said in a statement.

Amazon’s AWS cloud unit had revenue of $US9.9 billion for the quarter, up 34% from the year-ago period. That also beat street estimates of $US9.8 billion. The 34% growth rate, however, is the weakest year-over-year revenue growth since Amazon started disclosing the unit’s revenue in 2015, signalling the growing competition from rivals like Microsoft and Google.

First quarter revenue guidance came in the range of $US69.0 billion and $US73.0 billion, close to the $US71.6 billion street estimate.

Amazon’s physical store sales, which includes the Whole Foods segment, dropped 1% to $US4.4 billion in sales. The “other” segment, largely comprised of its advertising business, grew 41% to $US4.8 billion.

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