Amazon significantly beat fourth-quarter 2021 earnings estimates but narrowly missed on revenue, reporting Thursday a profit gain of almost $12 billion thanks to its investment in electric car company Rivian.
Net sales for the quarter were up 9% to $137.4 billion. After some favorable adjustments that excluded the $1.3 billion impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased to 10%.
Operating income decreased to $3.5 billion compared with $6.9 billion in Q4 2020.
The tech giant revealed in its Q4 earnings results that it is hiking the price of its Prime service from $12.99 to $14.99.
The company said: “With the continued expansion of Prime member benefits as well as the rise in wages and transportation costs, Amazon will increase the price of a Prime membership in the U.S., with the monthly fee going from $12.99 to $14.99, and the annual membership from $119 to $139.”
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Wall Street analysts forecast earnings per share (EPS) of $3.58 on $137.56 billion in revenue, per Refinitiv data. Amazon reported diluted earnings per share of $27.75 on $137.41 billion in revenue.
Amazon stock closed Thursday at $2,776.91 per share, with it climbing more than 18% in after-hours trading. The regular U.S. stock markets will reopen Friday at 9:30 a.m. ET.
“A big thank you to employees across Amazon who overcame another quarter of COVID-related challenges and delivered for customers this holiday season. Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we’ve continued to grow on top of that in 2021, our Retail teammates have effectively operated in peak mode for almost two years. It’s been a tremendous effort, and I’m appreciative and proud of how hard our teams have worked to serve customers,” CEO Andy Jassy said in a prepared statement accompanying the financials. “As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron. Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic. When you combine how we’re staffing and scaling our fulfillment network to bring even faster delivery to more customers, the extraordinary growth of AWS with 40% year-over-year growth (and now a $71 billion revenue run rate), the addition of marquee new entertainment like The Lord of the Rings: The Rings of Power and Thursday Night Football, and a plethora of new capabilities that we’re building in areas like Alexa, Ring, Grocery, Pharmacy, Amazon Care, Kuiper, and Zoox, there’s a lot to look forward to in the months and years ahead.”
When Amazon reported its third-quarter earnings miss in October, Jassy looked ahead to Q4, saying Amazon expected “to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs — all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”
At that time, Amazon was also projecting a nearly $1 billion increase in spending for digital media content during the fourth quarter, including video, music and games, CFO Brian Olsavsky said. For the year prior, Amazon spent about $11 billion on content for Prime services, an increase of 41% from $7.8 billion in 2019, the ecommerce giant disclosed in its annual report. Amazon projected net sales for Q4, typically its biggest of the year because of the holiday-shopping season, to be between $130 billion and $140 billion, or to grow between 4% and 12% year over year.
Jassy and other Amazon executives will host a conference call at 5:30 p.m. ET to discuss the quarter in greater detail.
More to come…
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