Amazon Stock Goes Buck Wild On Big Earnings Beat

Amazon announced its fourth-quarter earnings on Thursday afternoon.

The company missed on revenue but beat on earnings per share, sending the stock surging nearly 14% after hours.

Here are the numbers:

  • Revenue: $US29.33 billion (versus analyst expectations of $US29.68 billion).
  • EPS: $US0.45 (versus analyst expectations of $US0.18). That’s a beat by $US0.27, and a big improvement from the $US0.95 loss last quarter.

This is the first time Amazon has beat analysts’ EPS expectations in six quarters, and the stock’s massive leap shows that investors appreciate the profits — instead of losses — in Q4.

Net revenue for the quarter saw a 15% year-over-year increase; net revenue for the full year increased 20% year over year to $US88.99 billion.

The company reported operating income of $US591 million in Q4, compared to an operating loss of $US544 million last quarter. The company predicts an operating loss of as much as $US450 million for Q1 2015 for stock-based compensation and amortization of intangible assets (or income of $US50 million).

Operating cash flow increased 25% to $US6.84 billion and free cash flow decreased to $US1.95 billion for the trailing 12 months, compared with $US2.03 billion for the trailing 10 months ended Dec. 31, 2013.

Net loss for the year was $US241 million, compared with net income of $US274 million in 2013.

Although Amazon didn’t reveal the number of Prime subscribers, the company said that membership grew 53% last year, on a base of tens of millions.

“Prime is a one-of-a-kind, all-you-can-eat, physical-digital hybrid,” CEO Jeff Bezos said of the $US99 subscription service in the company’s report. “In 2014 alone we paid billions of dollars for Prime shipping and invested $US1.3 billion in Prime Instant Video. We’ll continue to work hard for our Prime members.”

Prime is one of the most important parts of Amazon’s business, not because of its $US99 fee, but because members spend more than double what nonmembers do on the site, according to a recent CIRP survey. The company invested so much in Prime Instant Video as a way to reel people into its ecosystem. Prime includes free, two-day shipping on millions of items, as well as access to of thousands of free TV shows, movies, music, and books and unlimited cloud storage for photos.

Amazon’s North American net sales increased 22%, while its international sales increased 3%.

Here’s the breakdown of where Amazon saw its sales growth:

Total international media sales shrank this quarter, but they grew in North America. On the earnings call, Amazon attributed that growth to new console launches in the US this year.

Here’s a look at how those total revenues have changed over time:

Amazon announced some very big news on its earnings call: It will start breaking out the financials of its cloud-computing business, Amazon Web Services.

Although Amazon doesn’t specifically break out revenue from AWS yet (it’s in the “other” category, which accounts for about 9% of North American sales), the company said on its call that AWS has over 1 million active customers and that it saw usage grow 90% year over year. On Wednesday, the company announced a new email product for businesses that it hopes will rival the offerings of Google and Microsoft.

The company said it spent $US3.4 billion on fulfillment expenses in the fourth quarter, up from $US2.9 billion in the fourth quarter of 2013.

Here’s our live blog of the earnings call:

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

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