Amazon Surplus Beats Expectations on Rivian, AWS, Raises Privilege Membership Prices

Amazon.com, Inc. announced its financial results for the fourth quarter of 2021 (ended December 31, 2021) after the market close on December 3, 2012: Net sales increased 9% year-over-year to US$137.4 billion, excluding the US$1.3 billion decline in foreign exchange rates, and net sales increased 10% year-over-year in the fourth quarter. Net income increased 98.6% to US$14.3 billion and diluted earnings per share were US$27.75.

Amazon noted that fourth-quarter net income included $11.8 billion in pre-tax non-operating income from its investment in Rivian Automotive, Inc (which completed its initial public offering in November 2021). (Source: Amazon.com)

Amazon expects net sales to increase 3% to 8% to $112 billion to $117 billion in the first quarter of 2022 (median $114.5 billion), a forecast that is expected to be impacted by about 150 basis points of unfavorable currency movements, and revenue is expected to range from $3 billion to $6 billion (median $4.5 billion, down 49.4%). Analysts expect Amazon’s net sales and revenue to reach US$120.94 billion and US$6.4 billion, respectively, in the first quarter.

Net sales for Amazon Web Services (AWS) rose 39.5% to $17.780 billion in the fourth quarter, with revenue up to 12.9% from 10.1% a year ago, and revenue up 48.5% to $5.293 billion. Analysts expect AWS to report net sales of $17.37 billion in the fourth quarter, according to StreetAccount. North America’s loss of $206 million was well below the $2.946 billion revenue performance a year ago, and international revenue of $1.627 billion was below the $363 million revenue performance a year ago.

Online store revenue decreased 1% year-over-year and increased 32.3% quarter-over-quarter to $66.075 billion, while physical store net sales increased 16.6% year-over-year and increased 9.8% quarter-over-quarter to $4.688 billion.

CNBC reported that this is the first time Amazon has reported advertising revenue.

Employees (including full-time and part-time, excluding contractors and temporary employees) increased 24 percent year-over-year and 9.55 percent quarter-over-quarter to 1,608,000.

Amazon also announced that the price of a U.S. Prime membership will increase: from $12.99 to $14.99 per month and from $119 to $139 per year, as Prime membership benefits continue to expand and salary and transportation costs increase.

This is the first time since 2018 that Amazon has increased its premium membership fees. The new membership price changes will take effect on February 18, 2022, and existing members will be subject to the new prices upon renewal after March 25, 2022. Amazon fell 7.81% to US$2,776.91 on March 3 and surged 13.95% to US$3,164.37 after hours.