Financial News Agency (Shanghai, Editor Shi Zhengcheng) News, After the market closed on Thursday local time, the e-commerce giant Amazon announced its 2021 Q4 quarterly financial report, driven by strong holiday season sales, rising profits from AWS business, and the implementation of price increases for Prime members. Next, it is expected to lead technology stocks to launch a rebound. As of press time, Amazon was up 13.99% after hours.
(Source: Company official website)
According to the financial report, Amazon’s net sales in the fourth quarter were US$137.4 billion, a year-on-year increase of 9%, and analysts expected US$137.82 billion; fourth-quarter operating profit was US$3.5 billion, a year-on-year increase of 98%, and the estimate was 24.3 US$14.3 billion; net profit of US$14.3 billion, equivalent to US$27.75 in earnings per share, estimated at US$3.77.
(Source: Company Financial Report)
First of all, it needs to be explained that the main reason for Amazon’s sharp increase in profits in the fourth quarter is the inclusion of a pre-tax surplus of US$11.8 billion from its investment in Rivian, an electric vehicle concept stock that landed on the US stock market in November last year.
Amazon warned investors before the start of the holiday season last October that due to tight supply chains and labor shortages, the company may need to significantly increase related expenses, including logistics costs, recruitment bonuses and overtime pay. According to the financial report, Amazon's performance expenses in the fourth quarter reached US$22.4 billion, an increase of nearly US$4 billion from the same period last year, basically in line with market expectations. Andy Jassy, CEO of
, said that as expected in the fourth quarter, we saw rising costs caused by labor supply shortages and inflationary pressures, and these problems are continuing into the first quarter of this year due to the Omicron epidemic. Despite such short-term challenges, the company continues to be optimistic and excited about the business as we emerge from the pandemic.
According to the financial report, AWS, Amazon’s most profitable cloud service, achieved revenue of US$17.78 billion in the fourth quarter, with the growth rate further increasing to 40%, and operating profit of US$5.29 billion, which also exceeded expectations. Advertising revenue disclosed separately for the first time reached US$9.716 billion, a year-on-year increase of 30%. Counting third-party seller services, subscription services and other businesses, more than half of the company's revenue currently comes from non-self-operated retail business channels.
(Source: Company Financial Report)
The Prime membership fee increase that was widely expected by the market before the financial report was released has also been implemented as scheduled. This round it will rise by US$20 to US$139. This is the first price adjustment in the past four years. Prime membership provides a series of services such as fast delivery, shopping discounts, and streaming media. The market generally expects price increases to help companies cope with rising cost pressures.
Amazon also expects the company’s revenue in the first quarter of this year to be approximately US$112-117 billion, with operating profit of nearly US$6 billion, roughly in line with analysts’ average expectations.
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