Amazon beat Wall Street expectations in its fourth-quarter earnings report, delivering stronger results than anticipated amid what CEO Andy Jassy said remains an “uncertain economy.”
The company had revenues of $149.2 billion in the quarter, compared to the $145.4 billion expected by the street. Earnings per share were $1.39, and operating income was $2.7 billion, down from $3.5 billion a year earlier.
Still, the results were better than expected, given the economic headwinds facing the major tech companies. Amazon, in a similar move to other tech giants, laid off 18,000 employees last month.
And while advertising has remained a tough business for some other tech players, it is booming at Amazon. The company reported ad revenues of $11.6 billion in Q4, up 23 percent from a year earlier. While Amazon does sell ads on programming like Thursday Night Football, the bulk of its advertising revenue is related to its ecommerce business.
“Sellers, vendors and brands continues to look to Amazon’s advertising capabilities to reach customers in the always competitive holiday season, even as the macro environment required them to scrutinize their own marketing budgets,” the company’s CFO Brian Olsavsky told analysts on the company’s earnings call.
The company also touted a number of its entertainment properties in its lengthy Q4 release, including its big Q4 bets The Lord of the Rings: The Rings of Power and NFL Thursday Night Football. But Amazon also touted Wednesday, the Netflix megahit produced by its MGM division.
In fact, entertainment appears to be a critical piece of the company’s future, with Olsavsky telling analysts that “along with competitive pricing, broad selection and faster delivery speed, we’ve seen Prime members respond to our expanding entertainment offerings,” calling out TNF and Lord of the Rings once more.
“We regularly evaluate the return on spend and continue to be encouraged by what we see as video has proven to be a strong driver of Prime member engagement and new Prime member acquisition,” he added.
Amazon CEO Andy Jassy, who was also on the call, more explicitly called out the value proposition:
“If you step back and think about a lot of subscription programs, you know, there are a number of them that are, you know, $14, $15 a month, really for entertainment content, which is more than what Prime is today,” Jassy said. “You think about the value of Prime, which [costs] less than what I just mentioned, where you get the entertainment content on the Prime Video side, and you get the shipping benefit the fast shipping benefit you can’t find elsewhere, and you get the music benefit, you get the prime gaming benefit … That is remarkable value.”
