Amazon founder/CEO Jeff Bezos promised to “double down” on Alexa after the company’s ubiquitous virtual assistant far exceeded even aggressive projections for fourth-quarter performance, which contributed to record earnings for the period.
The e-tailer blew past analyst estimates to post $1.9 billion in net income for the three months, ended Dec. 31, 2017, a 148 percent increase that included a $789 million benefit from the new U.S. tax law.
Net sales soared 38 percent for the all-important fourth quarter, to $60.5 billion, sending Amazon shares up more than 6 percent following yesterday’s announcement, and cementing Bezos’ standing as the world’s richest person.
On an earnings call, chief financial officer Brian Olsavsky said Amazon enjoyed record order volumes, particularly in North America, along with increased advertising revenue.
He also gave kudos to the operational team, which “did a great job” handling the torrent of business and integrating new fulfilment center capacity, which grew by 30 percent in each of the past two years.
“We see better efficiencies when warehouses are busy,” Olsavsky told analysts.
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Total online sales rose 20 percent to $35.4 billion for the quarter, while product sales through physical stores, including the recently acquired Whole Foods premium grocery chain, totaled $4.5 billion.
Also driving profits was Amazon Web Services (AWS), the company’s sky-high Cloud business. Net sales increased 45 percent for the quarter, to $5.1 billion, and operating income was up 46 percent, to $1.4 billion.
But Bezos, in a prepared statement, focused instead on Alexa, suggesting that the AI platform had reached an inflection point, with adoption by developers and other companies accelerating. To date, the virtual assistant boasts over 30,000 “skills,” or voice-command actions, he said, and can control more than 4,000 smart-home devices from 1,200 different brands.
“We don't see positive surprises of this magnitude very often,” Bezos noted. “Much more to come.”
For the full year, net sales rose 31 percent to $178 billion and net income was up 25 percent to $3 billion.
Looking ahead, the company is projecting year-over-year sales growth of between 34 percent and 42 percent in the first quarter, and operating income of $300 million to $1 billion, compared with last year’s $1 billion, suggesting plans for stepped up capital investment.