Amazon: Business blossomed in 4Q17, North American e-commerce and AWS drove revenue and profit growth

Amazon announced its fourth quarter and full-year financial report for 2017. As of December 31, 2017, Amazon's net sales in the fourth quarter were $60.5 billion, a year-on-year increase of 38%; net profit reached $1.9 billion, a 154% increase from $749 million in the same period last year, and earnings per share were $3.75, both exceeding analysts' expectations.

Amazon's revenue performance continues to be eye-catching as all businesses blossom. Whether it is online retail business, offline retail business, AWS cloud, paid video business, etc., all achieved good growth.

Amazon's online retail still contributes the majority of revenue, with a year-on-year growth of 17% in the fourth quarter to $35.4 billion. Retail subscription services, including Prime membership, e-books, audiobooks, digital videos, digital music, etc., saw a slower quarter-on-quarter growth this quarter, but the growth rate was still 47%.

AWS cloud business revenue grew faster, reaching $5.1 billion in a single quarter, up 44% year-on-year, exceeding the 42% growth rate in the previous quarter. Thanks to the revenue contribution of the acquired Whole Foods Market, Amazon's offline retail business also achieved $4.5 billion.

Amazon's operating profit in the fourth quarter was US$2.127 billion, up 69% from US$1.255 billion in the same period last year; Amazon's gratifying profit was mainly due to the improvement in profit margins of its retail business in North America, as well as the continued growth and profit improvement of its cloud business.

Amazon's good sales performance in North America in the fourth quarter increased the utilization rate of the logistics and warehousing centers invested and built last year, thereby improving operational efficiency.

Although Amazon's international retail business is still losing money, its advertising business and AWS have performed very well in terms of profits.

AWS has accelerated its growth compared to the third quarter, with revenue reaching $5.1 billion and annualized revenue reaching $20 billion. Compared to Google Cloud, which just broke through $1 billion in a single quarter, Amazon is clearly still ahead. Driven by economies of scale, Amazon's cloud business profits have continued to improve, with operating margins increasing by 100 basis points in the fourth quarter.

In the financial report, Amazon highlighted the progress of its intelligent voice assistant; "We've made important progress in getting businesses and developers to adopt Alexa. External developers have provided more than 30,000 skills for Alexa, and our consumers can use Alexa to control more than 4,000 smart home devices from 1,200 independent brands." Voice is an important entry point for smart home devices, and Amazon has undoubtedly seized the initiative and is far ahead of competitors such as Google and Apple.