Amazon Inc. reported net income of $1.9 billion for the quarter ended December 31, 2017 (Q4 2017), more than double of the $759 million net income reported in the corresponding quarter last year. Note that this includes a provisional tax benefit for the impact of the U.S. Tax Cuts and Jobs Act of 2017 of about $789 million.
The company’s total revenues for the quarter stood at $60.5 billion, up 38% from $43.7 billion in Q4 2016. While, operating income also increased by 69% year-on-year (YoY) to $2.1 million for the quarter from $1.3 billion in Q4 2016.
While answering an analyst question regarding Amazon’s performance outside North America, senior VP and CFO Brian Olsavsky said that the number of Prime members who joined India’s Prime program in the first year was higher than in any other country. He added that now the focus is on increasing the Prime eligible selection in India. It currently stands at over 25 million items, including Prime Video. Amazon is “also continuing to add other Prime benefits such as Prime Music will be coming soon, Amazon Family is there, as I said, Prime Video, and we had our first Prime Day in India.”
Note that Amazon signed its first content deal for music, hinting that the launch of Prime Music in India is near, with Zee Music Company, last month. In the same month, it also signed similar deals with Saregama and Sony Music.
Alexa & Other Devices
In the Q4 2017 earnings release, Amazon CEO Jeff Bezos had said that the company “far exceeded” the projections for Alexa in 2017. Currently;
The Alexa Skills store offers over 30,000 skills, including new developer tools for Alexa Gadgets and gaming experiences, such as Activision’s new Ghost skill for console game Destiny 2. Other new categories of skills include daily beauty podcasts from Hearst, All-Star game voting from the NBA, and more. Customers can also now use Alexa to control more than 4,000 smart home devices from 1,200 unique brands.
During the earnings call, Olsavsky added that the relationships Amazon has developed with external companies in helping accelerate the adoption of Alexa. He further said that “Echo, Echo Show and the Echo family (are) all directly tied to Alexa, but also Fire TV and tablets and we’re seeing more and more engagement. Alexa usage on Fire TV is up 9x year-over-year.”
Other Alexa Highlights
- It launched new ways for developers to earn money building for Alexa, including paid skill content through in-skill purchasing, premium subscription content, and a smoother checkout experience with Amazon Pay.
- Several new Alexa experiences were built from the ground up for customers in Japan, India, Canada, Australia, and New Zealand. Additionally, Amazon expanded Alexa, Echo, and Amazon Music Unlimited to 30 new countries, and enabling customers who purchase Echo devices the ability to experience Amazon Music Unlimited with natural voice controls powered by Alexa.
Whole Foods products are now available on Amazon’s website, and the company is currently working on making Prime the Whole Foods customer rewards programme. The company didn’t mention a specific date for this but said that they will make further announcements later in 2018. Amazon’s self-service delivery service Amazon Locker has also been introduced for Whole Foods.
Olsavsky further said that “the biggest effort will continue to be on groceries and consumables with the Whole Foods acquisition and again, we continue to look at our whole offering of AmazonFresh, Prime Now, Whole Foods, how can they work together to create better and better offerings for our customer base.”
Amazon will continue to invest in AWS infrastructure and further strengthen its technical and sales teams. Olsavsky said that “we’re very happy with both the progression in new services and features that we’ve been able to bring to customers and also their response with continued geographic expansion and continuing to again build on our tech teams and our sales teams.”
Olsavsky said that Amazon has launched several private label brands to supplement the range of selection available on its platform. “We look for ways to be able to find private label items that have a high-caliber of quality, but also can bring that selection and that convenience for customers and really supplement what vendors and sellers are already providing the customers in many cases.” Amazon Fashion is the segment where the company has been utlising private labels the most, such as Good Threads and Amazon’s Essentials. Recently, the company also launched two furniture brands called Rivet and Stone & Beam.
Listen: Earnings Call