'Alexa was very busy': Amazon reports record profits and strong holiday season

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True, the Seattle behemoth keeps hitting at least 20 percent revenue growth quarter after quarter - a huge success considering Amazon's size - thanks to its aggressive expansion efforts.

Company shares were down less than 1 percent after the market closed.

Shoppers will spend US$484 billion globally on Amazon this year, up 26 per cent from 2018, and the Seattle-based company will capture more than half of all online spending in the USA, according to EMarketer Inc. For the year, net sales were up 31 per cent to US$232.9 billion, compared to $177.9 billion in 2017.

Last year, Amazon streamlined its ad products so they were less confusing to brands, and folded them under the Amazon Advertising moniker.


Analyst Patrick Moorhead, founder of Moor Insights & Strategy, said in a statement that he attributes AWS's growth rate to "its increased flexibility through "elastic" capabilities as well as increased variability across EC compute capabilities".

"In 2018, we improved Alexa's ability to understand requests and answer questions by more than 20 per cent through advances in machine learning, 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". 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.

Amazon expects sales to grow between 10% and 18% in the first quarter, slightly below analyst forecasts. Amazon posted earnings per share of $6.04 on net income of $3 billion, surpassing a projected $5.68 per share. Although its operating loss shrunk to US$642-million from US$919-million in the quarter, rules in India created concern. On Thursday, Amazon reported that Amazon Web Services generated $7.4 billion in revenue, up 45 percent year over year.

Investor faith in Amazon's growing profits helped push the stock to a record high in September, before the shares dipped during a broader market slump at year's end.


Amazon stock closed at $1,718.73 Dollars (roughly $2,256.62 CAD) at the end of the day's trading.

Still, a tight labor market, rising shipping costs and money-losing investments overseas remain threats. The cost of stowing, packing and delivering goods increased 12 percent in the holiday quarter to $10 billion, in line with online sales growth of 12.5 percent.

First published January 31, 1: 26 p.m. PT. Update, 2:14 p.m. PT: More details added throughout.

"In a lot of ways, 2018 was about banking the efficiencies of investments in people, warehouses, infrastructure that we had put in place in 2016 and '17", Olsavsky said. With Amazon controlling 50 percent of e-commerce purchases in the USA, more sellers have an incentive to fork over money for these ads.


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