Amazon has largely beat analysts’ forecasts in the last quarter of 2019, buoyed by a “record” holiday season, the company announced on the occasion of the release of the Q4 2019 results. Amazon’s revenue rose 21% to $87.44 billion in October to December, according to a statement from the group. Wall Street was expecting just over $86 billion. Shares in the online retail giant jumped more than 11% on Thursday just after the announcement.
These sales were driven in particular by an upsurge in subscriptions to the Prime offer, which includes free and next day delivery on a number of products sold by the online distribution giant or its streaming video offering, for 119 million dollars per year in the United States (49 euros in France). Amazon had promised to deliver even faster members of its Prime offer. This promise has been enticing enough to blow up demand, said Amazon founder Jeff Bezos. he said in a statement.
That’s $50 million more than a year ago. Investors had been a little frightened by the cost to the company of this delivery offer — $800 million between April and June — but Jeff Bezos’s gamble, which never really worried shareholders, seems to be paying off. “Amazon blew up all the forecasts,” notes Andrew Lipsman, an analyst at eMarketer.
Cloud business now strongly competing with Microsoft Azure
If the jump in the stock materializes On Friday at the official session, Amazon is expected to have a market capitalization of more than $1 trillion. And Jeff Bezos, already the richest man in the world, will be even richer. He owns about 12% of the company’s shares launched in a garage in the mid-1990s. Earnings per share far exceeded expectations at $6.47 against 4.04 expected, according to Factset. Net income rose 10% to $3.3 billion. For the first quarter of fiscal 2020, Amazon expects sales to increase by 16 to 22%, between $69 billion and $73 billion.
The AWS division, which combines the outsourced it or cloud business and is one of the company’s main growth drivers, saw its revenue increase by 34% at the end of the year to some $10 billion. This is a strong increase, but less spectacular than in the previous quarter (up 45%) and especially weaker than that of Microsoft’s Azure division, its rival in this highly lucrative business sector (AWS accounted for 67% of operating profit, according to Patrick Moorhead, analyst at Moore Insight and Strategy).
However, “the increase in profits during this quarter despite higher costs and competitive pressure on AWS was the real surprise,” notes Andrew Lipsman of eMarketer. Amazon still owns a third of this very lucrative global market but Microsoft, whose CEO Satya Nadella has made the cloud a priority, is gaining ground even though it is still far behind with 14.5% of the market share