Amazon has posted its fourth quarter results, and the standout news is that Amazon Prime is going strong, meaning the company will continue to throw money at the service in an effort to make even more money.
Starting off on the figures-side of things, Amazon said holiday sales from the period, which ended in December, were up 15 per cent year-over-year, with $29.33 billion, but it only had a net income of $241 million. That's not a lot of profit, considering the massive amount of sales Amazon generated, but it is a profit nonetheless.
There is more good news, too: Prime memberships grew 53 per cent worldwide last year and were up 50 per cent in the US and "even a bit faster" abroad. Jeff Bezos, Amazon's CEO, therefore promised the company would continue to invest in Prime: “Prime is a one-of-a-kind, all-you-can-eat, physical-digital hybrid," he hailed.
Prime is Amazon's subscription service that gives members access to two-day shipping, as well as ebooks, videos, and music from Amazon.com. According to Tom Szkutak, Amazon's chief financial officer who spoke during the company's conference call, Prime members tend to step up their purchasing considerably compared to non-Prime members.
That last bit is key. Amazon is known for making profits one quarter and reporting losses the next. It's also known for putting huge amounts of money back into its operations. It likely believes investing in Prime will make operations efficient and sustainable. Bezos said Amazon put $1.3 billion into Prime Instant Video in 2014.
By continually investing so heavily into these types of products and services, Amazon has forecasted it could lose as much as $450 million next quarter, but it hopes to flip at least $50 million in profit.
Another stand-out component in Amazon's earnings is its cloud computing arm, called Amazon Web Services, which provides data storage and computing for Netflix, CIA, and NASA. One million people now use the 9-year-old service, and Amazon promised to start divulging the service's financials this year, suggesting it has really taken off.
In previous years, Amazon bundled all Amazon Web Services earnings into a miscellaneous "Other" category for North America sales. It saw $1.67 billion in sales for the fourth quarter. That said, as typical, Amazon hardly revealed any numbers in regards to other things that might have sold well or even businesses that might've performed well.
The company simply closed its earnings release by highlighting a few things in a letter to investors, including the launch of Fire TV stick and Echo and its recent Golden Globes win for Transparent.
Tune into Amazon's conference call at 2 PM PT to hear executives talk more about the earnings release.
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