MUMBAI: E-commerce giant Amazon beat analysts' expectation for the fourth quarter of 2018 after falling short of revenue expectations for the last two quarters. The company posted revenue of $72.4 billion and a record net profit of $3 billion. Despite the strong result, Amazon’s weak guidance for quarter 1 in 2019 dragged the stock down in after-hours trading.
While the revenue was of $72.4 billion against consensus expectation of $71.89 billion, earnings per share(EPS) came at $6.04 compared to $5.65. Though the result represents 20 per cent increase in revenue, the pace was slowest till the first quarter of 2015. Moreover, Amazon finished the year with $232.9 billion in annual revenue, passing the $200 billion milestone for the first time.
In the earnings release, the company claimed that tens of millions of customers worldwide started Prime free trials or began paid memberships during the Holiday season. It also added that more customers signed up for Prime worldwide in 2018 than ever before but did not reveal exact number.
The success of Alexa has been especially mentioned in the release. “Alexa was very busy during her holiday season. Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year,” Amazon founder and CEO Jeff Bezos said.
Amazon Web Service’s growth has again shown unbeatable revenue growth of 45 per cent reaching to $7.43 billion in the quarter. The company’s “other” category which primarily comprises advertising services jumped 95 percent to $3.4 billion in revenue.
Jeff Bezos led company called out the introduction of localised Hindi, Tamil, and Telugu language user interfaces in Amazon Prime Video India. It also mentioned the nomination of Inside Edge as the first Indian show from a video streaming service for the International Emmy Awards.
“Amazon partnered with ICICI Bank to launch the Amazon ICICI Bank credit card to preselected customers in India. This is the first card in the country to offer Prime members 5 per cent in reward points for their purchases on Amazon.in and reward points for all other payments where Visa is accepted,” the release read further.
However, the new FDI e-commerce rules in India, which include an e-commerce company with a marketplace model will not exercise control or ownership over the inventory that will be sold, is highly concerning the investors of Amazon. E-commerce restrictions can hit Amazon badly as it prevents to drive down prices in the country also. Moreover, it comes at a time when the company’s international sales growth also slowed to 15 percent compared to the previous year's 29 percent growth rate.
