Amazon manages to find a mere sliver of profit – just $2bn – out of $61bn in end-of-year sales

AWS continues to rake in billions, too


Amazon.com said its Q4 2017 net sales reached $60.5bn, an increase of 38 per cent from the $43.7bn reported by the tech giant during the same period a year earlier.

Analysts had been expecting somewhat less, $59.83bn, according to Thomson Reuters.

The earnings were revealed on Thursday, and lifted the book-selling, server-renting, somewhat-under-paying website's stock in after-hours trading by more than six per cent to $1,479.50 apiece, at the time this story was filed.

Other salient figures for the three months to the end of December include:

  • Net income hit $1.9bn or $3.75 per share. That's significantly more than the $1.83 expected. During Q4 2016, that figure was $1.54.
  • That figure includes a $789m, or $1.59 per share, penalty as a result of the US Tax Cuts and Jobs Act of 2017: the biz has a lot of dosh offshore, and this law allows it to bring that money back to America with a reduced levy on the overseas profit. Amazon also benefited from favorable foreign exchange rate changes over the year, amounting to a $1.1bn windfall.
  • Operating income rose 69 per cent to reach $2.1bn. It was $1.3bn in Q4 2016.
  • Amazon Web Services (AWS) revenue reached $5.1bn, higher than the $4.97bn anticipated by FactSet and up 45 per cent from $3.5bn reported in Q4 2016.
  • For all of 2017, net sales reached $177.9bn, up 31 per cent from $136bn in 2016, while net income was $3.0bn, or $6.15 per diluted share. AWS banked an operating income of $4.33bn from $17.5bn in sales.

In a statement, chief exec Jeff Bezos chose to focus on his firm's Alexa AI assistant, which he said had far exceeded expectations.

"We’ve reached an important point where other companies and developers are accelerating adoption of Alexa," gushed Bezos. "There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers."

The e-commerce biz said it sold "tens of millions" of Echo devices – which house the Alexa software – last year.

Coincidentally, research firm Canalys on Thursday said it expects "smart speakers" (the Echo family of products, Google Home, Apple HomePod, and the like) to be the fastest growing consumer tech product line in 2018, reaching 50 million units shipped. It estimates that Amazon sold about 21 million such devices in 2017.

On a conference call for investors, chief financial officer Brian Olsavsky attributed the successful quarter to the company's deft handling of record order volume as well as to growth in advertising revenue.

"We want customers to be able to see new brands and have an easier time discovering new products they're looking for," said Olsavsky. "...We're working with advertisers to all types and sizes to help them reach out customer base."

Looking ahead, Amazon said it expects net sales for Q1 2018 to range from $47.75bn and $50.75bn, reflecting projected growth between 34 and 42 per cent. ®

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