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Amazon Grows Sales 36 Percent in Fourth Quarter

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Amazon logoAmazon grew sales 36 percent in the fourth quarter of 2017 on a foreign-exchange neutral basis (that number includes all of its businesses including its AWS web-hosting business, of course).

It was a profitable quarter for the company: net income was $1.9 billion in the fourth quarter compared with net income of $749 million in fourth quarter 2016. Its profit was helped by a tax benefit of $789 million as part of the new tax overhaul, as the Wall Street Journal pointed out.

Amazon saw paid unit growth of 23% year over year with worldwide sellers accounting for 51% of the total units sold on Amazon.

Among the interesting factoids Amazon released about last year: it hired nearly 130,000 employees globally in 2017, excluding acquisitions.

Press release follows:

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Amazon.com, Inc. today announced financial results for its fourth quarter ended December 31, 2017.

Operating cash flow increased 7% to $18.4 billion for the trailing twelve months, compared with $17.3 billion for the trailing twelve months ended December 31, 2016. Free cash flow decreased to $8.4 billion for the trailing twelve months, compared with $10.5 billion for the trailing twelve months ended December 31, 2016. Free cash flow less lease principal repayments decreased to $3.4 billion for the trailing twelve months, compared with $6.5 billion for the trailing twelve months ended December 31, 2016. Free cash flow less finance lease principal repayments and assets acquired under capital leases decreased to an outflow of $1.5 billion for the trailing twelve months, compared with an inflow of $4.7 billion for the trailing twelve months ended December 31, 2016.

Common shares outstanding plus shares underlying stock-based awards totaled 504 million on December 31, 2017, compared with 497 million one year ago.

Fourth Quarter 2017

Net sales increased 38% to $60.5 billion in the fourth quarter, compared with $43.7 billion in fourth quarter 2016. Excluding the $1.1 billion favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 36% compared with fourth quarter 2016.

Operating income increased 69% to $2.1 billion in the fourth quarter, compared with operating income of $1.3 billion in fourth quarter 2016.

Net income was $1.9 billion in the fourth quarter, or $3.75 per diluted share, compared with net income of $749 million, or $1.54 per diluted share, in fourth quarter 2016. The fourth quarter 2017 includes a provisional tax benefit for the impact of the U.S. Tax Cuts and Jobs Act of 2017 of approximately $789 million.

Full Year 2017

Net sales increased 31% to $177.9 billion, compared with $136.0 billion in 2016. Excluding the $210 million favorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales increased 31% compared with 2016.

Operating income decreased 2% to $4.1 billion, compared with operating income of $4.2 billion in 2016.

Net income was $3.0 billion, or $6.15 per diluted share, compared with net income of $2.4 billion, or $4.90 per diluted share, in 2016.

“Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often — expect us to double down,” said Jeff Bezos, Amazon founder and CEO. “We’ve reached an important point where other companies and developers are accelerating adoption of Alexa. There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers. Much more to come and a huge thank you to our customers and partners.”

Highlights (Excerpts – see press release for all highlights – Ed.)

– In 2017, more than five billion items shipped with Prime worldwide.

– More new paid members joined Prime in 2017 than any previous year — both worldwide and in the U.S.

– Fire TV Stick and Echo Dot were the best-selling products in 2017 across all of Amazon. Customers purchased tens of millions of Echo devices last year.

– The Alexa Skills store now offers more than 30,000 skills, including new developer tools for Alexa Gadgets and gaming experiences, such as Activision’s new Ghost skill for console game Destiny 2. Other new categories of skills include daily beauty podcasts from Hearst, All-Star game voting from the NBA, and more. Customers can also now use Alexa to control more than 4,000 smart home devices from 1,200 unique brands.

– Amazon launched new ways for developers to earn money building for Alexa, including paid skill content through in-skill purchasing, premium subscription content, and a more frictionless checkout experience with Amazon Pay. New skills offering premium paid content include The Ellen DeGeneres Show’s popular Heads Up! game, The Match Game, and the History Channel’s Ultimate History Quiz.

– Alexa Voice Service (AVS) adoption among device makers continues to grow. Brands announced new AVS products at the 2018 Consumer Electronics Show, including: new integrations for Alexa on PCs from HP, Acer, ASUS, and Lenovo; a new automotive integration with Toyota; and new devices from Polk Audio, Anker, Jabra, and more.

– Amazon also introduced new tools and developer kits, including the Alexa Mobile Accessory Kit and Alexa Premium Far-Field Voice Development Kit, to make it easier for developers to bring Alexa to more devices.

– Amazon hired nearly 130,000 employees globally in 2017, excluding acquisitions. Additionally, Amazon now employs more than 17,500 veterans and military spouses across the U.S., and plans to hire over 10,000 more by 2021.

– Amazon welcomed several new device makers to the Dash Replenishment program to enable their smart appliances to automatically reorder consumables when supply runs low, including 3M, Hewlett-Packard, Kenmore, and Bluestream.

– Amazon celebrated the 10th anniversary of Kindle by releasing the all-new Kindle Oasis, the most advanced Kindle with a 7-inch, 300 ppi display, waterproof design, and access to the world’s largest library of audiobooks with Audible support. Since the Kindle launch in November 2007, customers have purchased tens of millions of Kindle e-readers.

– Amazon announced that the Prime Video app is now available on Apple TV in over 100 countries. Prime members now have more ways to stream award-winning and critically-acclaimed titles, including Amazon Original Movies and Prime Originals.

– Amazon introduced all-new Alexa experiences built from the ground up for customers in Japan, India, Canada, Australia, and New Zealand. Additionally, Amazon expanded Alexa, Echo, and Amazon Music Unlimited to 30 new countries, offering customers access to tens of millions of songs, thousands of hand-curated playlists and stations, and enabling customers who purchase Echo devices the ability to experience Amazon Music Unlimited with natural voice controls powered by Alexa.

– Amazon launched two furniture brands: Rivet, offering affordable and versatile mid-century modern furniture ideal for smaller spaces; and Stone & Beam, offering durable and stylish furniture for the modern household.

– Amazon Go, a new kind of store with no checkout required, is now open to the public in Seattle. The checkout-free shopping experience is made possible by the same types of technologies used in self-driving cars: computer vision, machine learning, and sensor fusion.

– Fulfillment by Amazon (FBA) shipped billions of items for small and medium-sized businesses, selling on Amazon worldwide in 2017.

– Amazon launched its retail and third-party marketplace offering in Australia with fast delivery on millions of products, including items from thousands of small and medium-sized businesses.

– Amazon launched Prime in the Netherlands and Luxembourg, and added the ability for customers in Belgium to join Prime and shop in Dutch. These programs offer members access to unlimited free one-day and two-day delivery, unlimited streaming of Prime Video, Twitch Prime, and early access to Prime Lightning Deals — all for an introductory price of €3.99 per month.

– Amazon launched Prime in Singapore, offering members access to unlimited free shipping on millions of local and international items, unlimited access to popular movies and TV shows on Prime Video, and video game benefits with Twitch — all for an introductory price of S$2.99 per month.

– Prime selection in India now offers members more than 25 million local products from third-party sellers.

– Amazon.com.br continues to expand its third-party marketplace, including the launch of Consumer Electronics, Home & Kitchen, Tools & Home Improvement, and Office Products. Customers in Brazil now have access to hundreds of thousands of products as well as more than 13 million print and digital books.

– Amazon celebrated its 10th holiday season of Frustration-Free Packaging — an invention designed to reduce waste and delight customers with easy-to-open, 100% recyclable packaging. As of the end of 2017, Amazon’s sustainable packaging innovations have helped to eliminate nearly 215,000 tons of packaging material and 360 million boxes.

– Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. announced a partnership to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.

– In December, Amazon’s “Delivering Smiles” holiday tour stopped in over 30 communities where Amazon employees live and work, donating thousands of items to women, children, and families fighting homelessness. For each mile traveled along the delivery route, Amazon donated $1 to the National Alliance to End Homelessness.

– Amazon reviewed 238 proposals from across the U.S., Canada, and Mexico to host HQ2, the company’s second headquarters in North America, and selected 20 metropolitan areas to move to the next phase of the process. Amazon expects to invest over $5 billion and create as many as 50,000 high-paying jobs at its new second home.

See full press release including financial guidance and charts on the Amazon investor relations website:

SOURCE: Amazon Press Release

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Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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