Amazon’s fourth-quarter revenue of $87.4 billion net profit, up 8% yoy

Amazon today reported fourth-quarter and full-year results for fiscal 2019. Amazon reported fourth-quarter net profit of $3.268 billion, up 8 percent from a year earlier of $3,027 million, and net sales of $87.437 billion, up 21 percent from $72.383 billion a year earlier. Amazon’s fourth-quarter revenue and earnings per share both beat Wall Street analysts’ expectations, pushing its shares up nearly 13 percent after the session.

Amazon's fourth-quarter revenue of $87.4 billion net profit, up 8% yoy

Key results:

Amazon’s net income for the quarter ended December 31 was $3.268 billion, or $6.47 per diluted share, better than a year earlier. In the fourth quarter of fiscal 2018, Amazon’s net income was $3,027 million, or $6.04 per diluted share.

Amazon’s fourth-quarter operating profit was $3.879 billion, compared with $3.786 billion a year earlier.

Amazon’s fourth-quarter net sales were $87.437 billion, up 21 percent from $72.383 billion a year earlier. Excluding the negative impact of the $120 million change, Amazon’s fourth-quarter net sales also rose 21 percent from a year earlier.

Amazon’s fourth-quarter revenue and earnings per share both beat Wall Street analysts’ expectations. Forty-four analysts had expected Amazon’s fourth-quarter earnings of $4.03 per share, and 41 analysts on average expected Amazon’s fourth-quarter net sales of $86.02 billion, according to Yahoo.

Financial analysis:

Amazon’s operating cash flow for the 12 months ended December 31, 2019 was $38.5 billion, up 25 percent from the same period last year, and $30.7 billion in the 12 months ended December 31, 2018.

Amazon’s free cash flow for the 12 months ended December 31, 2019 was $25.8 billion, up from $19.4 billion in the same period last year.

After deducting the lease principal repayments, Amazon’s free cash flow over the past 12 months was $16.2 billion, up from the same period last year, and Amazon’s free cash flow after deducting the aforementioned items was $11.6 billion in the 12 months ended December 31, 2018.

After deducting the principal repayments on financial leases and assets acquired under the capital lease, Amazon’s free cash flow over the past 12 months was $12.5 billion, compared with $8.4 billion in the 12 months ended December 31, 2018.

Operational data:

Amazon’s fourth-quarter net sales were $50,542 million, up from $44.700 billion a year earlier, while its net sales of services were $36.895 billion, up from $27.683 billion a year earlier.

In July, Amazon forecast net sales of $80 billion to $86.5 billion in the fourth quarter of fiscal 2019, up 11 to 20 percent from a year earlier, including a negative impact of about 80 basis points expected from currency movements that fell short of analysts’ expectations at the time. Amazon also forecast operating profit of $1.2 billion to $2.9 billion in the fourth quarter of fiscal 2019, compared with $3.8 billion for the same period in 2018.

By geographic basis, Amazon’s North American division (U.S., Canada) posted net sales of $53.670 billion in the fourth quarter, up 22 percent from $44.124 billion a year earlier, while operating profit was $1.90 billion, down from $2.251 billion a year earlier.

Amazon International (UK, Germany, France, Japan and China) reported net sales of $23.813 billion in the fourth quarter, up 14 per cent from $20.829 billion a year earlier, while operating loss was $617 million, slightly narrowing from a $642 million operating loss a year earlier.

Amazon’s sales from its North American division accounted for 61% of total sales in the fourth quarter, the same as a year earlier, while sales from the international sector accounted for 27% of total sales, down from 29% a year earlier.

Amazon’s fourth-quarter net sales of AWS Cloud Services were $9.954 billion, up 34 percent from $7.43 billion a year earlier, while operating profit was $2.596 billion, up from $2.177 billion a year earlier.

Sales from AWS cloud services accounted for 12% of total sales, up from 10% in the same period last year.

By service and business type, Amazon’s net sales from online stores in the second quarter were $45.657 billion, up 15 percent from $39.822 billion a year earlier, and the impact of currency changes was also up 15 percent year-on-year.

Net sales from brick-and-mortar stores were $4.363 billion, down 1% from $4.401 billion a year earlier, and the impact of currency movements, excluding exchange rate movements, was also down 1% year-on-year.

Net sales from third-party seller services were $17.446 billion, up 30% from $13.383 billion in the same period last year, and 31% year-on-year, excluding exchange rate movements.

Net sales from subscription services were $5.235 billion, up 32% from $3,959 million a year earlier, while the impact of currency movements, excluding exchange rate movements, was also 32% year-on-year.

Net sales from AWS cloud services were $9,954 million, up 34% from $7.43 billion a year earlier, and 34% year-on-year, excluding exchange rate movements.

Net sales from other businesses were $4,782 million, up 41% from $3.388 billion a year earlier, while the impact of currency movements was also up 41% year-on-year.

For fiscal 2019, Amazon’s net sales were $280.5 billion, up 20 percent from $232.9 billion in fiscal 2018, and Amazon’s net sales for fiscal 2019 were up 22 percent year-on-year, excluding the negative impact of $2.6 billion from currency movements.

Amazon’s operating profit for fiscal 2019 was $14.5 billion, compared with $12.4 billion in fiscal 2018.

Amazon’s net income for fiscal 2019 was $11.6 billion, or $23.01 per share, compared with $10.1 billion, or $20.14 per share, for fiscal 2018.

Earnings expectations:

Amazon expects net sales of $69 billion to $73 billion in the first quarter of fiscal 2020, up 16 percent to 22 percent from a year earlier, including a positive impact of about 5 basis points that currency movements are expected to bring.

Amazon also forecast operating profit of $3 billion to $4.2 billion in the first quarter of fiscal 2020, compared with $4.4 billion for the same period in 2018.

Amazon’s median first-quarter net sales forecast range was $71 billion, less than analysts expected. Thirty-four analysts had expected Amazon’s first-quarter net sales of $71.64 billion, according to Yahoo.

Share price changes:

Amazon shares rose $12.68, or 0.68 percent, to $1,870.68 in regular trading. Amazon shares rose another $236.32, or 12.63 per cent, to $2,107.00 in after-hours trading as of 4.45pm EST on Thursday (5.45am BST on Friday). For the past 52 weeks, Amazon’s highs have been $2,035.80, with a low of $1,566.76.