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Amazon shares surge on strong earnings update
[SAN FRANCISCO] Amazon shares shot higher on Thursday after the internet colossus released quarterly earnings figures for the holiday quarter that trounced market expectations.
Profit in the final three months of last year rose eight percent from a year ago to US$3.3 billion as revenue as net sales grew 21 per cent to US$87.4 billion, according to the Seattle-based firm.
A record number of people signed up in the quarter for an Amazon Prime service that provides perks from one-day delivery to streaming television and music, according to Amazon chief executive Jeff Bezos.
"We now have over 150 million paid Prime members around the world," said Mr Bezos.
Amazon has expanded from its original mission as an online retailer and now is a major force in cloud computing, and its AI-powered digital assistant Alexa has been incorporated into thousands of consumer products.
It also operates one of the largest streaming video services and recently announced that its streaming music service has won more than 55 million subscribers, closing in on Apple Music.
Amazon has also been spending big on original content for its Prime service, which faces Netflix, Disney+, Apple TV+ and other rivals in an increasing competitive streaming television market.
Shares in Amazon surged 12 per cent in after-hours trade after the better-than-expected report, a jump likely to lift the value of the tech giant to over US$1 trillion.
"Amazon blew all expectations out of the water during the holiday quarter," said Andrew Lipsman of the research firm eMarketer, noting that the rollout of next-day Prime delivery helped momentum.
Patrick Moorhead of Moor Insights & Strategy was also upbeat on the results, pointing to the 34 per cent revenue growth for the cloud computing unit AWS: "It generated nearly US$10 billion in quarterly revenue and 67 per cent of the entire company's operating income."
SHAKING OFF JITTERS
The strong earnings report defied investor concerns about Amazon pouring money into shortening Prime delivery times to a single day, and the momentum of its money-making cloud services businesses being slowed by being denied a major contract with the US government.
Amazon Web Services, its cloud division, took in nearly US$10 billion in revenue in the quarter, up from US$7.4 billion in the same period a year earlier.
The company has been expanding globally, and Mr Bezos promised to invest at least US$1 billion in India in a high-profile visit to the country earlier this month.
The three-day visit by Mr Bezos, the world's richest person whose worth has been estimated at more than US$110 billion, sparked protests in New Delhi and other cities by traders who accuse Amazon and its main US-owned rival Flipkart of killing off India's army of street traders.
Amazon's earnings update showed it had 798,000 full-time employees worldwide, up 23 per cent from a year ago amid a continued global expansion and ramping up of its logistics networks for speedy deliveries.