Amazon hits record $4.3 billion profit

Amazon continues to increase its global dominance. Photo/123RF.

Amazon closed 2018 with a record US$3 billion (NZ$4.3 billion) in profit in the fourth quarter, running off the fuel of the holiday season to beat Wall Street expectations. But its guidance for the start of 2019 fell short.

On Thursday, the retail giant announced its sales were up 20 per cent in the last quarter to US$72.4 billion. Amazon Web Services, the company's cloud computing division, reported a 45 per cent jump in the fourth quarter to hit US$7.43 billion in sales. AWS revenue alone made up 10 per cent of Amazon's total quarterly sales - reinforcing just how dominant cloud computing has become for a company broadly thought of as an online retailer.

The results also offered a full look at Amazon's performance in 2018. For the year, net sales were up 31 per cent to US$232.9 billion, compared to $177.9 billion in 2017.

The company said that for the first quarter of 2019, net sales are expected to fall between US$56 billion and US$60 billion - though some analysts had set their sights on nearly $61 billion. Amazon projected first-quarter growth to hit between 10 and 18 per cent compared to the same period last year.

Amazon stock was up nearly 3 per cent Thursday evening and closed for the day at US$1,718.73 per share.

Amazon founder and chief executive Jeff Bezos pointed to sales of Echo Dot devices in 2018 and said "Alexa was very busy during her holiday season." He said that the number of research scientists working on Alexa has more than doubled in the past year.

"In 2018, we improved Alexa's ability to understand requests and answer questions by more than 20 per cent through advances in machine learning," Bezos said in a statement. "We added billions of facts making Alexa more knowledgeable than ever. Developers doubled the number of Alexa skills to over 80,000. And customers spoke to Alexa tens of billions more times in 2018 compared to 2017."

(Bezos also owns The Washington Post.)

Last month, Amazon celebrated "record-breaking" holiday sales, with particularly strong sales on millions of Amazon devices. In the United States, the company shipped more than 1 billion items for free over the holidays with Prime. The retail giant also reported that more than 50 per cent of items sold online over the holidays came from small- and medium-size businesses.

In the third quarter, Amazon pulled in US$2.9 billion in quarterly profit, with sales that climbed nearly 30 per cent to US$56.6 billion. But those results still fell short of Wall Street's expectations, even despite the broadly-popular discount event, Prime Day.

- Washington Post