SAN FRANCISCO — Amazon sold a lot of things to a lot of people in the last three months of 2019, as speedy shipping shortened the time between “I want it” and “It’s here.”
That was expected. What no one forecast was that profits would also shoot up.
On Thursday, Amazon said it had earned $6.47 a share in profit in the quarter, up from $6.04 a year earlier. Analysts had expected $4.04 a share, and some would not have been surprised if it had been less. Amazon had gone wide with one-day shipping for millions of its Prime members, which does not come cheap.
Sales came in at $87.4 billion, up 21 percent from a year earlier and above what Wall Street had anticipated.
Amazon shares soared more than 12 percent in after-hours trading. That added at least $100 billion to the company’s valuation, at least for the night, pushing it above $1 trillion again.
“More people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” Jeff Bezos, Amazon’s chief executive, said in a statement.
AWS, the high-margin cloud computing division, which has been a big source of Amazon’s profits in recent years, increased its revenue by 34 percent to $9.95 billion.
Amazon has a wide lead in renting computer space to other companies, although Microsoft, which reported this week that its cloud revenues were up 62 percent, is striving to catch up.
The fourth quarter of 2019 was the first big test of one-day shipping, which began last spring.
In early 2019, sales at the Amazon store were drifting down, growing at a modest rate (for Amazon) of about 12 percent annually. Always fearful of settling into complacency, the company announced that it was making one-day shipping standard to its 100 million Amazon Prime households. Two-day shipping had been the rule since Prime’s introduction in 2005.
The company said it would spend $800 million to carry out the program. It was classic Amazon: trading profit for revenue. As usual, the revenue flowed in.
If the customers loved it, investors were less convinced. Amazon shares lagged the broader market for the past year.
“With investors seemingly less accepting of the ‘growth over profits’ philosophy, we believe it is important for the company to lay out a clearer road map of the remaining investments related to one-day shipping,” analysts at Canaccord Genuity wrote in a note on Thursday before the earnings were released.
It looks like that worry has been taken care of.
