- Amazon Web Services (AWS) revenue surpassed analyst expectations, growing at its fastest pace since the first quarter of FY 2019.
- AWS is Amazon's high-margin cloud computing business.
- Amazon received a major boost to net income from its investment in Rivian Automotive.
- Amazon said that it will raise the price of its Prime membership service for the first time since 2018.
|Amazon Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Amazon Web Services Revenue||Beat||$17.8B||$17.3B|
Source: Predictions based on analysts' consensus from Visible Alpha
Amazon (AMZN) Financial Results: Analysis
Amazon.com, Inc. (AMZN) reported mixed results in its Q4 FY 2021 earnings report. Earnings per share (EPS) smashed analysts' expectations, nearly doubling from the year-ago quarter. The company's net income was boosted by a $11.8 billion pre-tax valuation gain from its investment in Rivian Automotive, Inc. (RIVN). Amazon's revenue came in below analyst forecasts, rising 9.4% year over year (YOY). Amazon Web Services (AWS) revenue exceeded consensus estimates.
The company's shares rose as much as 17% in extended trading. Over the past year, Amazon's shares have provided a total return of -16.0%, well below the S&P 500's total return of 16.9%.
AMZN AWS Revenue
Amazon's AWS revenue rose 39.5% compared to the year-ago quarter, its fastest pace since the first quarter of FY 2019. AWS is Amazon's cloud computing platform. It offers developers a range of on-demand technology services, such as compute, storage, database, analytics, machine learning, and other services. These services are primarily used by start-ups, enterprises, government agencies, and academic institutions.
Amazon's AWS business generates much higher margins than its e-commerce business. In the fourth quarter, Amazon's global retail sales- and subscription-based business segments generated about 87% of the company's total revenue, while AWS accounted for a mere 13%. However, AWS accounted for all of the operating income during the quarter. The international sales- and subscription-based business segments reported a combined operating loss of $1.8 billion during the quarter.
AMZN Labor and Supply Chain Challenges
Amazon said that it saw higher costs over the holiday season, mostly driven by labor supply shortages and inflationary pressures. It noted that these challenges continued into the current first quarter due to the omicron variant of the coronavirus. One way the company plans to offset these higher costs is by raising the price of its Prime membership service in the U.S.. Amazon said that the monthly fee would be raised to $14.99 from $12.99 and that the annual membership would be raised from $119 to $139. It is the first time the company has raised the price of Prime since 2018.
Amazon expects its net sales for the first quarter of FY 2022 to be between $112.0 billion and $117.0 billion, or an increase of between 3% and 8% compared to the year-ago quarter. Operating income is expected to be somewhere between $3.0 billion and $6.0 billion.
Amazon's next earnings report (for Q1 FY 2022) is expected to be released on April 27, 2022.
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TradingView. "Price Chart: AMZN and S&P 500."
Amazon.com Inc. "Form 10-K for the Fiscal Year Ended December 31, 2020," Page 43.
Amazon.com Inc. "Form 10-K for the Fiscal Year Ended December 31, 2020," Page 65.
Yahoo! Finance. "Earnings Calendar: AMZN."