On its Q4FY19 earnings conference call, the Amazon leadership was asked multiple questions about the outlook for its India business. Here are the most pertinent responses:
On the Indian FDI in ecommerce policy, the company’s CFO Brian Olsavsky said, “… There is much uncertainty as to what the impact of the government rule change is going to have on the e-commerce sector there…. Our main issue and our main concern is trying to minimize the impact to our customers and sellers in India. We’ve built our business around price selection and convenience. We don’t think the changes help in those dimensions for both the customers in India and also the sellers.”
Olsavsky: “The new regulations… need to make sure they don’t have unintended consequences. And again, I don’t think it’s necessarily consistent with better price, better selection and better convenience for the Indian customer. So it’s not all we can say on that topic right now.“
Amazon has reported operating income of $3.8 billion for the quarter ended 31 December 2018 (Q4FY19), up from $2.1 billion in Q4FY18. Its net sales were up by 20% to $72.4 billion, up from $60.5 billion in Q4FY18. Excluding the impact of foreign exchange rate changes in the year, net sales increased by 21% as compared to Q4FY18. Amazon’s net income was up to $3 billion, from $1.9 billion in Q4FY18.
- Operating cash flow increased 67% to $30.7 billion for the trailing twelve months, compared with $18.4 billion for the trailing twelve months ended December 31, 2017.
- Free cash flow increased to $19.4 billion for the trailing twelve months, compared with $8.3 billion for the trailing twelve months ended December 31, 2017.
- Common shares outstanding plus shares underlying stock-based awards totaled 507 million on December 31, 2018, compared with 504 million one year ago.
For the whole year of 2018
- Net sales increased by 31% to $232.9 billion, compared with $177.9 billion in 2017
- Net sales increased 30% compared with 2017 (excluding the impact of foreign exchange rate changes in the year)
- Operating income increased to $12.4 billion, compared with operating income of $4.1 billion in 2017
- Net income increased to $10.1 billion, from $3.0 billion in 2017.
International sales and expenses
Internationally (business outside the US) for Q4FY19, net sales were $20,829 million, operating expenses $21,471, thus registering an operating loss of $642 million, down from $919 million in Q4FY18. For the full year 2018, net sales were $65,866 million, operating expense $68,008 million, leading to an operating loss of $2,142 million (lower than the loss of $3,062 million for the 12 months ended 31 December 2017). Employees (full-time and part-time; excludes contractors & temporary personnel) were at 647,500, up 14% YoY.
Jeff Bezos, Amazon founder and CEO, said, “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% through advances in machine learning, we added billions of facts… 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.”
- Amazon introduced new smart home features for Alexa
- This was Ring’s best quarter, selling millions of devices globally
- More than 150 products now have Alexa built-in
- More than 1 million customers requested an invitation for Echo Auto
- The Alexa Skills Store now offers over 80,000 skills and Alexa customers can access Apple Music’s library of 50 million songs on their Echo devices
- Alexa answers more questions with Alexa Answers; knows more about math and science through Wolfram Alpha; provides location-based reminders and routines; launches Skype etc
- During the holiday season, “tens of millions of customers” started Prime free trials or began paid memberships across the world.
- More customers signed up for Prime worldwide in 2018 than ever before.
- Prime Video is now available on Comcast’s Xfinity X1 in the US.
- Prime Video introduced localized Hindi, Tamil, and Telugu language user interfaces in India.
- Amazon expanded free grocery delivery and pickup from Whole Foods Market through Prime Now, allowing delivery within an hour and pickup in 30 minutes.
- Prime FREE Same-Day Delivery and Prime FREE One-Day Shipping expanded to more than 10,000 cities and towns in the US.
- More than 50% of units sold on Amazon’s stores during the holiday season came from small and medium-sized businesses.
- Third-party sales growing faster than first-party sales, and nearly 200,000 small and medium-sized businesses surpassed $100,000 in sales on Amazon’s stores in 2018.
- Amazon launched Amazon Pop-Up stores in six countries across Europe during the holiday season, showcasing over 2,000 products
- The new Echo Dot was the top selling product on Amazon globally, from any manufacturer, in any category
- IMDb launched IMDb Freedive, a free (ad-supported) streaming video channel available in the US on the IMDb website via laptop or personal computer and all Fire TV devices.
- Amazon partnered with ICICI Bank to launch the Amazon ICICI Bank credit card
- Amazon expanded in Brazil, with a new Amazon fulfillment center in the Greater São Paulo area, its first fulfillment center in South America.
- In 2018, authors earned over $260 million from the Kindle Direct Publishing Select Global Fund, totaling more than $840 million since the launch of Kindle Unlimited.
- Thousands of independent authors earned over $50,000, with more than a thousand surpassing $100,000 in royalties in 2018 through KDP.
AWS reported net sales of $7,430 million for Q4FY19 ($5,113 million for Q4FY18) , operating expenses of $5,252 million ($3,759 million for Q4FY18) and an operating income of $2,177 million ($1,354 million for Q4FY18).
- AWS launched the AWS GovCloud (US-East) and AWS Europe (Stockholm) Regions, with plans for AWS Africa (Cape Town) and AWS Europe (Milan) Regions.
- AWS announced two purpose-built database services, Amazon Timestream, a fully managed time series database for IoT, industrial telematics, application monitoring, and DevOps applications, and Amazon Quantum Ledger Database (QLDB), a cryptographically verifiable ledger.
- AWS also announced Amazon DocumentDB, a managed document database service that supports MongoDBworkloads.
- AWS introduced Amazon Managed Blockchain
Other notes from investor call
- On changing commission fees – Olsavsky: “… Part of that involves changing fee structures, sometimes, adding new fees or subtracting old ones, part of it involves raising or lowering fees that sellers pay… We generally work to change the fees to make sure that the incentives are strong on both sides….”
- On spends on Prime Video: Olsavsky, “We’re not quantifying the Prime video spend today, but we do – it has been increasing. We expect it to increase even further in 2019. We’re seeing a lot of again continued strong adoption and the usage and viewing and hours watched of our — both our music and our seasoned video and music… it builds stronger Prime connectivity… the higher membership renewal rates and higher overall engagement.”