Amazon reported a profit near $2 billion, the largest in its history, as the online retailer drew millions of new customers to its Prime fast-shipping club for the holiday season and as changes to US tax law added to its bottom line.
Shares on Thursday rose more than 6 per cent in extended trading, after previously closing down 4 per cent on the Nasdaq, Reuters news agency reported.
Seattle-based Amazon is using fast shipping, television shows exclusive to its website, and forays into new technology, such as its voice-controlled Alexa devices, to attract high-spending Prime members. Amazon said price cuts at Whole Foods Market, which it acquired for $13.7 billion last year, are helping it win grocery sales, too.
The world's largest online retailer said net income more than doubled to $1.86 billion, or $3.75 per share in the fourth quarter ended Dec. 31. Its profit received a provisional $789 million boost from the US Republican tax bill passed in December. Analysts on average were expecting just $1.85 per share, according to Thomson Reuters I/B/E/S.
“This was another blow-out quarter for Amazon,” said GBH Insights analyst Daniel Ives. “The retail strength was eye-popping as the company had a banner holiday season and looked to capture roughly 50 percent of all e-commerce holiday season sales.”
As expected, the period running from before the US Thanksgiving holiday through New Years was Amazon’s biggest-ever by revenue. Sales rose 38 per cent to $60.5 billion in the quarter, beating estimates.
The company’s fast delivery, like its two-hour Prime Now service, has helped win over holiday shoppers eager to avoid the crowds of big box retailers. Prime saw more than 4 million sign-ups in one week alone last quarter, and revenue from subscription fees grew 49 per cent to $3.2 billion, Amazon said.
That figure is expected to rise this quarter in part because the company recently raised the fee for month-to-month Prime plans, affecting some 30 per cent of subscribers, according to analysts at Cowen & Co. Some 60 million, or close to half of all US households, are estimated to have Prime subscriptions.
Advertising and other revenue rose 62 per cent to $1.74 billion.
