Amazon Hikes Prime Price Tag, Stock Climbs 15%
On the heels of a tech rout on Wall Street, Amazon released fourth-quarter results on Thursday (February 3) that encouraged investors (the stock jumped 15% after hours), although the costs of execution and labor can weigh in the short term.
Headlines indicate Prime membership fees are rising to $139 per year from $119 per year, showing that for the third time in the past decade the company has the power to increase a key service which, especially during the pandemic, has become indispensable.
The holiday season has been kind to Amazon. As for the headline numbers, $137.4 billion in quarterly revenue (just slightly below expectations), compared to $125.6 billion in the same period a year ago. Management said on the call that the company’s two-year compound annual growth rate was 25%.
By exploring the segments, the company broke its revenue contributorsnoting that:
Online store (direct e-commerce) sales were $66 billion, down 1% year-on-year and up from $49.9 billion in the third quarter. Physical store sales increased 16% year-on-year to $4.7 billion, excluding currency.
Revenue from third-party vendor services increased 12% (excluding XF) to $30.3 billion. During the conference call with analysts, the Chief Financial Officer Brian Olsavsky said third-party sellers accounted for 56% of all unit sales in the quarter, the highest fourth-quarter mix in company history.
Amazon Web Services (more commonly known as AWS) saw 40% year-over-year revenue growth to $17.8 billion; management said the company was on a $71 billion annual run rate.
Ad sales increased 32% to $9.7 billion.
During the conference call with analysts, Olsavsky said the company is aiming for new momentum in its advertising business, tied in part to Twitch and other properties. The company still views its vendors as continuous avenues of advertising consumption. The company’s AWS is available in 84 zones in 26 regions, and the company is targeting expansion to 24 zones and eight additional regions over the next few years.
Looking to improve delivery
Labor and inflation costs (essentially related to labor costs) added $4 billion to operating expenses in the quarter. Those costs are expected to continue to be high in the near term, management said on the call.
Delivery efforts were also a focus, as management said on the call that the company aims to return to pre-pandemic levels for one-day delivery and bring day delivery. even in more metropolitan areas.
See also: Domino’s industry leader Amazon is rethinking free last-mile delivery
Amazon, of course, has been developing its logistics over the past few years, and capital expenditure would, according to Olsavsky, be allocated about 40% to infrastructure, about 30% to warehouses, and about 25% building transportation. . capacities. He also noted that the company’s capacity had doubled over the past two years.
Amid builds and continued investment in delivery, the CFO said “we like where we are,” adding that “there is still work to be done to improve customer service. We like the progress we are making. and the future looks promising in this dimension.