Amazon Profit Largest in History on Sales and Tax Reform

Amazon.com Inc. reported on Thursday a profit of almost $2 billion, its largest in history, as the e-commerce giant attracted millions of new Prime customers during the holiday season and as changes in the tax law across the U.S. added to the bottom line.

Shares were up over 6% in Thursday extended trading, after closing down by 4% on Nasdaq. Amazon is using television shows that are exclusive to its site, shipping, and entrances into new technology, like its Alexa voice controlled devices, to attract Prime members who are high-spenders.

Amazon said that price cuts at its Whole Foods Market, acquired by Amazon last year for $13.7 billion, have helped win more grocery sales.

The largest retailer online in the world said that net income reached $1.86 billion equal to $3.75 a share for its December 31 ending fourth quarter. Profit was helped by a provisional boost of $789 million from the tax bill approved by the Congress and signed by the president. Analysts were expecting per share earnings of $1.85 a share.

This was an excellent quarter at Amazon, said one industry analyst as the retail strength was extraordinary and its holiday season very strong as it looked to capture close to 50% of all holiday season e-commerce sales.

As was expected, the period from prior to the Thanksgiving holiday up through New Year’s Day, was the biggest ever for Amazon for revenue. Sales increased 38% to over $60.5 billion during the quarter, which beat estimates.

The fast delivery by the company, such as its Prime Now two-hour service has helped to win over shoppers during the holiday season that are eager to miss crowds at big box retailers.

Membership club Prime had over 4 million new sign-ups during just one week last quarter, while revenue from subscription fees increased by 49% to more than $3.2 billion, said the e-commerce giant.

That figure will likely increase during this quarter partly due because Amazon recently increased month to month fees for Prime plans affecting approximately 30% of its subscribers. Close to 60 million equal to about half of all households in the U.S. are believed to hold Prime subscriptions.

Advertising and forms of revenue increased 62% to more than $1.74 billion.

The CFO of Amazon Brian Olsavsky said that the advertising was a big contributor to the growing profit margin of the company.

On Thursday, Alphabet, Google’s parent, posted ad revenue that reached $27.2 billion.

No Comments

    Leave a reply