Amazon reports strong quarter with big earnings growth; revenue jumps 14%

Amazon ended the year with better-than-expected fourth-quarter earnings and revenue, helped by a record-breaking holiday season and ongoing efforts to cut costs.

The online giant's net income increased to $10.6 billion in the quarter ended Dec. 30, or $1.00 per share, compared with $0.3 billion, or $0.03 per share, in the year-ago quarter. Analysts had been expecting earnings of $0.80 per share. Operating income increased to $13.2, compared with $2.7 billion.

Net sales increased 14% to $170.0 billion, up from $149.2 billion in the same period last year and topping analysts’ estimates of $166.0 billion. North America sales rose 13% year-over-year to $105.5 billion. International sales increased 17% year-over-year to $40.2 billion.

Sales in the company’s closely-watched cloud-computing division, AWS, increased 13% year-over-year to $24.2 billion, in line with expectations. Advertising services revenue increased 27% to $14.7 billion, more than expected. 

Amazon released its earnings the same day it announced news about its latest AI innovation: a generative AI shopping assistant in its mobile app called “Rufus.”

“This Q4 was a record-breaking holiday shopping season and closed out a robust 2023 for Amazon,” said Andy Jassy, Amazon CEO. “While we made meaningful revenue, operating income, and free cash flow progress, what we’re most pleased with is the continued invention and customer experience improvements across our businesses.”

In his statement, Jassy said that the regionalization of Amazon’s U.S. fulfillment network led to its fastest-ever delivery speeds for Prime members "while also lowering out cost to serve."

For the full year, Amazon’s net sales increased 12% to $574.8 billion, with North America segment up  12% year-over-year to $352.8 billion. The company’s net income was $30.4 billion in 2023, or $2.90 per share, compared with a net loss of $2.7 billion, or $0.27 per share, in 2022.

Amazon expects first-quarter sales to range between $138 billion and $143.5 billion, representing growth of 8% to 13%. Analysts were expecting revenue of $142.1 billion.

“As we enter 2024, our teams are delivering at a rapid clip, and we have a lot in front of us to be excited about,” Jassy stated.

David Silverman, senior director, Fitch Ratings, expects that Amazon’s growth could moderate somewhat in 2024, particularly given an expected slowdown in consumer discretionary goods spending.

"However, the company’s leadership position in both e-commerce and cloud computing, good strategic track record, and ability to invest in initiatives to expand share should allow Amazon to effectively navigate through a potentially volatile environment," he said.

Amazon’s earnings release included a listing of its 2023 highlights, some of which are outlined below.

•In 2023, Amazon delivered to Prime members at the fastest speeds ever globally, with more than 7 billion units arriving the same or next day, including more than 4 billion in the U.S. and more than 2 billion in Europe. Amazon now offers Same-Day Delivery in more than 110 U.S. metro areas and operates more than 55 dedicated Same-Day sites across the U.S.

•Expanded Amazon Fresh grocery delivery and free pickup to customers without a Prime membership in the U.S. The company also redesigned multiple Amazon Fresh stores in the UK and U.S. and opened several new Whole Foods Market stores in the U.S. It also expanded third-party grocery delivery with additional Weis Markets supermarkets in the U.S. and ARCS Supermarket in Japan.

•Announced that Prime members in the U.S. can now add health care from One Medical to their Prime membership for $9 per month (or $99 annually) and include up to five additional family members for $6 per month each.

•Announced that Prime Air drone deliveries will expand to Italy, the UK, and an additional location in the U.S. in late 2024. Amazon will also integrate drone deliveries into the company’s Same-Day sites, which will provide customers with faster delivery on a greater selection of items. Prime Air uses drones to safely deliver packages weighing up to five pounds in one hour or less.

•Launched several new AI-powered innovations to help customers shop for fashion with more confidence in Amazon’s store, including personalized size recommendations using AI and ML to help customers find what size fits them best, Fit Review Highlights with personalized feedback from customers who wear the same size, and improved size charts that make it easier for customers to find relevant information in a more visually engaging way. Amazon also developed a Fit Insights Tool to help brands and selling partners better understand customer fit issues and incorporate feedback into future designs and manufacturing.