Amazon Reports Weaker Guidance | Financial Buzz

Amazon Reports Weaker Guidance

Amazon.com Inc. (NASDAQ: AMZN) reported its fourth quarter financial results after market close on Thursday. The tech giant topped earnings and revenue estimates, however, Amazon reported weaker-than-expected guidance, causing shares to fall by 4%.

For the fourth quarter, Amazon reported earnings of USD 6.04 per share on revenue of USD 72.4 Billion. Refinitiv analysts projected earnings of USD 5.68 per share on revenue of USD 71.9 Billion.

Amazon’s stronger-than-expected quarter was driven by its holiday season sales, increasing net sales by 20% year-over-year. Chief Executive Officer Jeff Bezos said in the earnings press release that the Echo Dot was the best selling product globally.

The increased sales in Amazon’s Echo and Alexa-enabled devices allowed the Company to deliver full year revenue of USD 232.9 Billion, increasing by 31% year-over-year.

Despite strong Echo sales globally, sales for both the North American and International segment lagged behind. The North American segment witnessed an 18% growth year-over-year this quarter compared to the 42% growth last year. Internationally, Amazon saw sales increase by 15%, which also fell behind its 29% growth the same quarter last year.

Amazon’s AWS reported net sales of USD 7.43 Billion, which grew by 45% year-over-year and  topped analysts’ expectations of USD 7.3 Billion.

AWS helped Amazon report record profits for the third consecutive quarter. Net income within the quarter rose by 66% year-over-year to USD 3.02 Billion. According to CNBC, Amazon is also getting a profit boost from advertising and third-party marketplace, where margins are bigger but sales are smaller.

For the first quarter of fiscal 2019, Amazon expects net sales between USD 56 Billion and USD 60 Billion, growing in between 10% and 18%. FactSet analysts are projected revenue of USD 60.8 Billion.

Amazon’s weaker guidance was due to its investments. Amazon Chief Financial Officer Brian Olsavsky said in the earnings call that the Company slowed its investments last year, specifically crossing hiring and capital expenditures. Now, Olsavsky expects the investments to pick up.

Amazon shares have still increased by 9.5% this year despite its guidance miss.