Amazon has reported record sales in its Q4 results as the tech firm continued to benefit from a boom in online shopping accelerated by the coronavirus pandemic.
Revenue came in at $125.6bn, up 44% year on year and soaring past $100bn for the first time – a milestone passed by Apple in its earnings report last week.
For the quarter ended 31 December 2020, Amazon reported net income of $7.2bn, up from $3.3bn in Q4 2019.
This translated to earnings per diluted share of $14.09, nearly double the figure forecasted by Refinitiv.
Amazon’s Q4 results were boosted by the holiday period and the company’s Prime Day shopping event being moved from July to October due to disruption from the pandemic.
Cloud computing subsidiary Amazon Web Services (AWS) also reported a strong quarter, with revenue growing by 28% to $12.74bn.
“Amazon delivered another homerun quarter, underlining the fact that its business model perfectly positions it to expand its ecommerce dominance even more broadly as the Covid-19 pandemic continues to rage on,” said Jesse Cohen, senior analyst at uk.Investing.com.
“Despite its 65% rally over the last 12 months, it looks like Amazon is well-positioned for further upside, considering its explosive growth in e-commerce and its booming AWS cloud-computing business.”
Bezos steps down
Bundled in with Amazon’s Q4 results was the surprise announcement that Jeff Bezos is to step down as CEO of the company he founded back in 1994.
Andy Jassy, chief executive of AWS, will take the role of Amazon CEO while Bezos will transition to the role of executive chair in the third quarter of 2021.
“Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more,” said Bezos in a statement.
“If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”
A successful 2020 for Amazon
Amazon’s Q4 results cap off a phenomenal year of growth for the ecommerce giant.
Net sales in 2020 surged by 38% year on year to $386.1bn, while net income increased to $21.3bn, up from $11.6bn in 2019.
The firm’s operating income came in at $22.9bn, up from $14.5bn in 2019.
It is a year in which Amazon spent billions on Covid-19 related costs, including $5bn in operational costs it absorbed on behalf of small businesses. The company said it expected Covid-related costs to decrease to around $2bn in the first quarter of fiscal year 2021.
“Amazon closed out a hugely challenging, but very successful, 2020 with a record-breaking quarter, beating its own revenue guidance,” said Martin Garner, COO, at CCS Insight.
“Ecommerce growth was especially strong outside North America, boosted by lockdown conditions in many countries where the company operates. Amazon Prime continues to provide a flywheel effect, driving increased volumes of product sales and use of video and music per user.”
In its first-quarter 2021 guidance Amazon said it expected net sales to be between $100bn and $106bn. This would mark year-on-year growth of between 33% and 40%.
Hugh Fletcher, global head of consultancy and innovation at Wunderman Thompson Commerce, said:
“Amazon has massively outperformed the market and will continue to ride the growing tidal wave of online commerce for as long as it delivers for customers and innovates with the times – and with the head of Amazon’s cloud business asked to lead the company, it’s likely Amazon’s focus on technology will continue unabated.”