Black Friday and Cyber Monday contributed to Amazon’s strong quarter, but keep an eye on AWS, which is soaring above the clouds.
Amazon has reported fourth-quarter revenue of $72.4bn, up 20pc year on year, yielding it a net income of $3bn.
The company’s fourth-quarter results exceeded Wall Street expectations and the $3bn profit was Amazon’s third record profit in a row.
‘Alexa was very busy during her holiday season’
– JEFF BEZOS
The Q4 results were given a boost from huge sales from Black Friday, Cyber Monday and Christmas promotions all through December.
During the quarter, the company revealed plans to invest $5bn in two new HQs in New York and Virginia.
It also emerged last year that Amazon was creating 1,000 jobs (primarily seeking engineers and security/data specialists for both Amazon and Amazon Web Services) in Ireland and opened a new 170,000 sq ft building in Dublin 4.
The company is seeing enormous growth in its advertising business, with which it intends to take on Google and Facebook. However, a real profit driver to watch is Amazon Web Services (AWS), the Seattle internet giant’s cloud computing group, which brought in $7.29bn in operating profit, just ahead of its retail division for North America which brought in $7.26bn in operating profit. Watch those clouds!
For the full year 2018, Amazon sales soared to $232.9bn compared with $177.9bn in 2017, while net income increased to $10.1bn, compared with $3bn in 2017.
Amazon’s $15 hourly minimum wage went into effect in the US and UK on 1 November for all full-time, part-time, temporary and seasonal employees, benefiting more than 250,000 employees in the US and 17,000 employees in the UK, as well as more than 200,000 seasonal workers hired for the Christmas season.
The company revealed that following the announcement of its wage increase, it received a record number of 850,000 work applications in the US, more than double the previous record for the most applications received in a month.
Amazon also launched Amazon Future Engineer, a childhood-to-career programme that aims to inspire and educate millions of children and young adults from underserved and low-income communities about computer science and coding each year. Through this programme, the company will fund coding camps and online lessons, pay for introductory and advanced placement courses in computer science for more than 100,000 underprivileged young people in 2,000 low-income high schools across the US, and annually award 100 students from underserved communities who are pursuing degrees in computer science with four-year $10,000 annual scholarships, as well as paid internships at Amazon.
Alexa has skills
Amazon also introduced new smart home features for Alexa. Customers can now choose from more than 28,000 Alexa-compatible smart home devices from more than 4,500 unique brands, and Alexa Guard helps invited Echo customers keep their homes safe through Smart Alerts, Away Lighting, and voice control of security systems from Ring and ADT.
The new Echo Dot was the number one selling product on Amazon globally while the Ring smart doorbell had its best quarter ever, selling millions of devices globally.
Amazon added that it made new scientific advancements with Alexa, including an unsupervised self-learning system that detects the defects in Alexa’s understanding and automatically recovers from these errors, helping Alexa learn at a faster pace. The company also introduced a new text-to-speech system, which uses a generative neural network and produces more natural speech, paving the way for Alexa and other services to adopt different speaking styles based on different contexts.
“Alexa was very busy during her holiday season,” chirped Amazon CEO and founder Jeff Bezos. “Echo Dot was the bestselling item across all products on Amazon globally and customers purchased millions more devices from the Echo family compared to last year.
“The number of research scientists working on Alexa has more than doubled in the past year, and the results of the team’s hard work are clear. In 2018, we improved Alexa’s ability to understand requests and answer questions by more than 20pc through advances in machine learning; we added billions of facts, making Alexa more knowledgeable than ever; developers doubled the number of Alexa skills to over 80,000; and customers spoke to Alexa tens of billions more times in 2018 compared to 2017.
“We’re energised by and grateful for the response, and you can count on us to keep working hard to bring even more invention to customers,” Bezos promised.
Looking ahead to Q1 2019, Amazon said that sales are likely to be between $56bn and $60bn, anticipating unfavourable foreign exchange rates.