Amazon reported record-breaking numbers last night and beat all expectations across all major categories. The negative narrative going into the quarter suggested that one-day shipping would cost Amazon on the bottom line. However, with a shortened holiday season, it appears that there was a lot of rushed consumer holiday shopping which supported the top-line and wasn’t as detrimental to the bottom line as feared. Increases were massive quarter over quarter (of course, due to seasonality) but were also huge year-over-year. Every major part of Amazon’s business grew and beat expectations:
- Earnings per share: $6.47 per share vs. expectations of $4.03 per share, according to analysts surveyed by Refinitiv
- Revenue: $87.44 billion vs. expectations of $86.02 billion, per Refinitiv
- Amazon Web Services: $9.95 billion vs. expectations of $9.81 billion, according to FactSet
Amazon also gave increased forward guidance, which indicates that the momentum is expected to continue.
In terms of the grocery battleground, online grocery orders went up 2X and this comes after Amazon’s move to completely waive the $14.99 monthly fee for Amazon Fresh, for Prime Members. Meanwhile, Whole Foods was slightly down; this represented the only area of decline. So, there are hits and misses in the grocery space, but Amazon expects continued overall rapid growth in the grocery category (offline and online together) to continue.
In terms of Prime, Amazon made a formal update for the first time since 2018. There are now “more than 150 million Prime members world-wide. The last company update on Prime membership was in 2018, when Amazon reported that there were over 100 million Prime members. Again, the growth theme is evident and shows no sign of slowing down.
Lastly, Amazon’s “other” business (which is mostly advertising) hit $4.8 billion for the quarter. That was an astounding 41% growth over the year ago period!
If analysts thought Amazon’s growth story was moderating or that their ability to turn a profit given increased investment was waning, then they were simply inaccurate. We continue to believe in the long-term growth potential and the change they will force on retail will only accelerate from here.