Amazon posted profits of $14.3 billion, nearly doubling year-over year despite heavy spending in the December quarter, thanks to strong results in its cloud division and a gain of $11.8 billion in the value of its stake in Rivian Automotive following the electric vehicle maker’s initial public offering.
The company also announced a $20 increase in its annual Prime membership fee, to $139 from $119 previously.
Amazon’s overall operating income, which did not reflect the increased value of the Rivian stake, was cut nearly in half, to $3.5 billion, from $6.9 billion the fourth quarter of the prior year, providing a more telling view of the state of the company’s business.
Amazon Web Services, the company’s cloud division, posted $17.8 billion in revenue, up nearly 40%, and $5.3 billion in operating income, more than making up for an operating loss in the rest of the Amazon business.
“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,” Amazon CEO Andy Jassy said in the company’s earnings release. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”
- Net sales rose 9% to $137.4 billion, missing Wall Street’s expectations of $137.6 billion due to the unfavorable impact of foreign exchange rates.
- Earnings per share were $27.75, eclipsing the expected $3.70 per share thanks to the boost from Amazon’s Rivian investment.
Amazon for the first time detailed revenue from its growing advertising business, which generated $9.7 billion in the quarter, up 33% year-over-year. Advertising makes up 7% of Amazon’s total revenue and helps boost the company’s bottom line given the high profit margins in digital advertising.
The company’s guidance for the first quarter put net sales between $112 billion and $117 billion, up 3% to 8%, and operating income between $3 billion and $6 billion, down from $8.9 billion a year earlier.
Amazon shares were up more than 14% in after-hours trading.
Jassy had previously warned that the quarter would bring “several billion dollars of additional costs” in the company’s consumer business, due to increased labor and shipping costs.