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Amazon’s net sales increase 21% YoY, claims over 150 million Prime subscribers globally

Amazon’s net sales increased 21% to $87.4 billion in Q4FY19, compared to $72.4 billion in the same quarter last year. Operating income increased to $3.87 billion in the fourth quarter, compared with operating income of $3.78 billion in Q4FY18. Net income increased to $3.3 billion in the fourth quarter, as opposed to a net income of $3.0 billion in Q4FY18. Net sales for 2019 increased 20% to $280.5 billion, compared with $232.9 billion in 2018.

Amazon Prime: CEO, Jeff Bezos said that there are now over 150 million Prime subscribers globally, and that more people joined the service in Q4FY19, than any other quarter in the company’s history. During a call with investors, CFO Brian Olsavsky said that Amazon spent less than the $1.5 billion he expected for the extra Prime benefits in the fourth quarter. Brazil had the fastest growth in paid Prime members this quarter, after the service was launched there last September.

  • Amazon Fresh, which was previously $14.99 a month, is now a free benefit for Prime members in the USA.

AWS grows, but investors remain sceptical: Amazon Web Services (AWS) saw a 34% YoY increase in sales for a total of $9.95 billion in revenue during the quarter; operating income grew 19% YoY to $2.6 billion. Olsavsky said that AWS is currently present in 69 availability zones, spread across 22 geographical locations. However, a few investors raised concerns about AWS’ slowing revenue and margin compared to the previous quarter ($8.96 billion net sales in Q3FY19), and if that was due to “increased competition” (read Microsoft Azure). Olsavsky said the company was “happy” with the revenue numbers for AWS.

Ad revenue: Amazon’s “Other” revenue — which Amazon says is mostly ad revenue with some other service offerings included — increased 41.1% YoY to $4.78 billion.

Net sales from:

  • Online stores: $45.6 billion
  • Physical stores: $4.3 billion
  • Third-party services: $17.4 billion
  • Subscription services: $5.2 billion
  • Net sales in the North American market was $53.6 billion, and $23.8 internationally
    • Olsavsky noted that a Japanese consumption tax hike and the timing of India’s Diwali holiday in 2019 relative to 2018 had about a 3-percentage-point impact on International growth.

Fire TV had more than 40 million active users worldwide; last quarter Fire TV had 37 million active users globally.

Amazon India: Olsavsky said that the company was investing in digitising medium and small businesses in India, and the recent announcement to invest $1 billion in India is in line with that. The company is aiming to bring 10 million micro, medium and small businesses in India online , and create 1 million jobs here by 2025, he said. Amazon has come under pressure from offline retailers, who have accused it of deep discounting and preferential treatment of certain sellers. The Competition Commission of India ordered a probe into the company and Flipkart, earlier this year, to investigate these allegations.

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  • The company will deploy 10,000 electric vehicles in its delivery fleet in India by 2025. As of December 2019, Amazon India had more than 550,000 sellers on its platform, and more than 60,000 Indian manufacturers and brands were exporting their products to customers worldwide.

Amazon Music had more than 55 million customers worldwide. Collectively, in the US, UK, Germany, and Japan, Amazon Music customers grew nearly 50% year-over-year; and in newer marketplaces like France, Italy, Spain, and Mexico, Amazon Music customers more than doubled in 2019. Additionally, Amazon Music Unlimited subscribers grew more than 50% in 2019.

Downloads: Financials | Investor presentation | Investor call transcript

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