Amazon CEO Jeff Bezos has yet another reason to pop open a bottle of champagne: his company brushed aside analysts’ expectations and increased its turnover 43 % to 51 billion dollar (42 billion euro). Net profit even doubled to 1.63 billion dollar.
Prime reason for enormous growth
Amazon Prime, the Seattle-based company’s flagship for most consumers, played a very important part in that enormous growth. Subscription revenue grew 60 % in a year’s time to 3.1 billion dollar (2.5 billion euro). Considering the fact that the 100 million Prime members also placed more orders, product revenue also grew 33 % to 31.6 billion dollar (26 billion euro).
The company will increase the annual subscription price, from 99 to 119 dollar (almost 100 euro), after it had recently increased its monthly price from 11 to 13 dollar. Given the more than 100 million subscribers, this move alone will generate 2 billion dollar (more than 1.5 billion euro) per year. CFO Brian Olsavsky clarifies that “we will continue to increase Prime’s value”: members will get advantages to shipping benefits and gain access to an ever growing video database.
Another large contributor was Amazon’s cloud service, as Amazon Web Services’ turnover grew 50 % to 5.44 billion dollar (4.5 billion euro). The category “other”, which mostly includes ad revenue, also spiked 250 % to 2.03 billion dollar (1.7 billion euro). The “physical stores” generated a 4.3 billion dollar turnover (3.5 billion euro), but there is no comparison possible with the previous year, considering the division was only launched in 2017’s third quarter, after Amazon acquired the Whole Foods chain.
Profit up 125 %
The company’s net profit grew 125 % to 1.63 billion dollar (1.35 billion euro), despite its increased investments in logistics (+ 66 % to 7.8 billion dollar), marketing (+ 41 % to 2.7 billion dollar) and technology (+ 34 % to 1.1 billion dollar).
Amazon has forecast a 51 to 54 billion dollar turnover for its next quarter, with analysts right in the middle with 52.2 billion dollar (43 billion euro). Profit should be between 1.1 and 1.9 billion dollar, but analysts estimate it slightly lower, at “merely” 1.01 billion dollar (800 million euro).
