A big jump in expenses didn’t hold back Amazon earnings, but the world’s biggest retailer is nonetheless planning to increase the costs of its Prime membership.
Updated at 4:34 pm EST
Amazon Inc (AMZN) – Get Amazon.com, Inc. Report posted stronger-than-expected second quarter earnings Thursday, while unveiling a price increase for its Prime members, as costs for the world’s biggest retail continue to accelerate.
Amazon said net income for the three months ending in December was pegged at $14.3 million, or $27.75 per share, nearly double the tally from the same period last year and absolutely crushing the Street consensus forecast of $3.67 per share. The figure did include, however, an $11.8 billion boost from Amazon’s stake in EV maker Rivian Automotive (RIVN) – Get Rivian Automotive, Inc. Class A Report. Operating income for Amazon Web Services was up 48.5% from last year to $5.3 billion.
Group revenues, Amazon said, rose 9% from last year to $137.4 billion, just ahead of analysts’ estimates of a $137.6 billion tally, with around 66.1 billion of that coming from online store sales. Ad services revenues were $7.35 billion and Amazon Web Services contributed $17.78 billion.
Operating expenses were up 13% at $133.95 million, Amazon said, linked largely to labor and shipping cost increases.
Amazon Fourth-Quarter Earnings Live Blog With Eric Jhonsa
Looking into the current quarter, Amazon said it sees operating income of between $3 billion to $6 billion on revenues in the range of $112 billion to $117 billion, compared to the Refinitiv forecast of $120 billion.
“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron,” said CEO Andy Jassy. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”
“When you combine how we’re staffing and scaling our fulfillment network to bring even faster delivery to more customers, the extraordinary growth of AWS with 40% year-over-year growth (and now a $71 billion revenue run rate), the addition of marquee new entertainment like The Lord of the Rings: The Rings of Power and Thursday Night Football, and a plethora of new capabilities that we’re building in areas like Alexa, Ring, Grocery, Pharmacy, Amazon Care, Kuiper, and Zoox, there’s a lot to look forward to in the months and years ahead,” he added.
Amazon shares were marked 17.6% higher in extended-hours trading following the earnings release to indicate a Friday opening bell price of $3,271.00 each.
Prime costs, Amazon said, will rise from $12.99 to $14.99, with the annual membership rising 16.8% to $139, with changes for new members coming into effect on February 18. For existing members, the increase will come on March 25.
Amazon said in October that it would hire 150,000 workers heading into the holiday season, with wages as high as $21 an hour, amid one of the most severe labor shortages in U.S. history. Sign-on bonuses of up to $3,000 were also on the table, Amazon said, with the bulk of the new roles based in Arizona, California, Colorado and Florida.
Amazon CFO Brian Olsavsky cautioned at the time that costs linked to hiring, inflation and other “operational disruptions” could rise to as high as $4 billion over the December quarter.
