Amazon just published its earnings for the fourth quarter and full year for 2018, and within the press release Amazon let us know that tens of millions of people “started Prime free trials or began paid memberships” during the holiday season. Amazon also mentioned that more customers signed up for Prime worldwide in 2018 than ever before.
Typically, Amazon does not announce how many Prime members it has. However, last April, Amazon’s CEO Jeff Bezos did announce that there were over 100 million Amazon Prime members. Showing that it’s a pretty popular subscription service. And having “tens of millions” either start a free trial or a paid membership just in the last quarter of 2018, is still significant.
Amazon Prime is a subscription service that the retailer has, allowing customers to get unlimited free two-day shipping on millions of items, as well as discounted overnight shipping. It also offers up some other features like Amazon Prime Video, Twitch Prime and so much more. While Amazon has been increasing the cost of Prime in the last few years, it has also been adding more features to Prime to make it more worthwhile.
Amazon also expanded Prime Free Two-Day shipping to more than 10,000 cities and towns in the US, during 2018. Thanks to expansions with Amazon Air, now being available in a handful of new airports.
For the fourth quarter, Amazon posted Net Sales numbers of about $72.4 billion, that is a 20-percent increase, compared to the same period a year ago. Operating income also increased to $3.8 billion in the fourth quarter, and that was compared to the operating income of $2.1 billion in the fourth quarter a year ago. This is not a huge surprise, given the fact that Amazon did raise its minimum wage for all 250,000 employees in the fourth quarter.
For 2018 as a whole, Net Sales increased 31-percent to $232.9 billion. Operating Income also increased quite a bit to a whopping $12.4 billion, from $4.1 billion the year before.
As always, Amazon did also post guidance for the first quarter of 2019, which it expects Net Sales to be between $56 billion and $60 billion. That would be a 10 to 18-percent growth compared to the first quarter of 2018. Operating income is also expected to be between $2.3 billion and $3.3 billion. That’s up from the $1.9 billion from a year ago. As always, this is just guidance and should be taken with a grain of salt. But it is assuming that all acquisitions, investments, etc, go through as expected.
It was a decent quarter for Amazon, despite warning analysts and investors on its third quarter call that it was expecting to have a slower holiday quarter. A 20-percent increase in Net Sales year-over-year is nothing to sneeze at. Of course, the big driver for Amazon there was its Echo and Alexa line-up of products. Bezos stated that the Echo Dot was the most popular product bought during the holidays worldwide. That should come as no surprise, seeing as the Echo Dot was super popular before the holidays and it got a huge price drop during the holidays.