Amazon Reports $20 Billion Quarterly Profits

Amazon’s fourth-quarter profits soar to a record $20 billion, but cloud growth falls short of expectations.

At a Glance

  • Amazon reported $187.8 billion in net sales, a 10% increase
  • Quarterly profits exceeded $20 billion, an 88% increase from the previous year
  • Amazon Web Services (AWS) sales were $28.8 billion, slightly below expected growth
  • Amazon shares fell more than 4% in after-hours trading
  • Company employed 1,556,000 full- and part-time employees, a 2% increase from the previous year

Record-Breaking Profits Amid Mixed Results

E-commerce giant Amazon has reported a staggering $20 billion in quarterly profits, marking a significant milestone for the company. The fourth-quarter results, released on Thursday, revealed a 10% increase in net sales, totaling $187.8 billion. This impressive performance surpassed Wall Street expectations, with earnings per share reaching $1.86, well above the anticipated $1.48.

Despite the overall positive outcome, Amazon’s cloud division, Amazon Web Services (AWS), fell slightly short of growth projections. AWS sales reached $28.8 billion, representing a growth rate just under 19%, narrowly missing the expected 19.3% increase. This minor setback in cloud growth appears to have tempered investor enthusiasm, as Amazon shares dipped more than 4% in after-hours trading.

Diverse Revenue Streams Contribute to Success

Amazon’s financial success stems from its diverse portfolio of services. Online stores sales climbed to $75.5 billion, a 7.1% increase, while third-party seller services saw a 9% boost, reaching nearly $47.5 billion. The company’s advertising revenue demonstrated particularly strong growth, surging by almost 18% to $17.3 billion.

Subscription services, including Amazon Prime, continued to perform well, with revenue increasing by 9.73% to $11.5 billion. Even Amazon’s physical store presence showed resilience, with an 8% year-over-year increase to $5.6 billion. These varied income streams highlight Amazon’s ability to capitalize on multiple sectors of the retail and technology markets.

Cloud Computing: A Double-Edged Sword

While AWS sales fell slightly short of expectations, the division remains a crucial component of Amazon’s profitability. Despite accounting for only 15% of total sales, AWS contributed over 50% to Amazon’s operating profits, generating $10.6 billion.

The slight slowdown in AWS growth may reflect broader trends in the cloud computing industry, as businesses carefully manage their technology spending in an uncertain economic climate. However, Amazon’s continued dominance in this space suggests that the company is well-positioned to weather any short-term fluctuations in demand.

As of December 31, Amazon reported a workforce of 1,556,000 full- and part-time employees, representing a 2% increase from the previous year. This modest growth in employment, excluding contractors and seasonal workers, indicates a measured approach to expansion in line with the company’s financial performance.

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