Rahul Sachitanand
Jan 31, 2020

India helps light up Amazon's strong Q4 earnings

Billion dollar investment, job generation plans and Prime growth help drive company's robust sales and profit growth in Q4

CEO of Amazon Jeff Bezos is seen with with Amit Agarwal, senior vice president and country manager for Amazon India, on his recent visit
CEO of Amazon Jeff Bezos is seen with with Amit Agarwal, senior vice president and country manager for Amazon India, on his recent visit

Amazon has posted strong financial results for the fourth quarter of 2019, with sales up 21% to US $87.4 billion and profit rising to $6.47 a share, beating analyst expectations. For the full year, net revenue increased 20% to $280.5 billion, compared with $232.9 billion in 2018.  Amazon shares surged 12.7% in after-hours trading on the news. 

For such a large company, Amazon provides little in the way of detailed geographic breakdowns, splitting performance into just three broad earnings categories from North America (responsible for 61% of total sales in 2019), International (27%) and AWS (12%).

North American net sales jumped 22% on quarter and 21% for the year to an annual total of $171 billion, while international sales rose 14% in Q4 and 13% for the year to reach $75 billion in 2019. 

But Amazon's AWS segment grew the most, with Q4 revenue of $9.95 billion, up 34% from $7.43 billion a year ago, while its annual revenue jumped 37% to $35 billion for the year. Its "other" category, mostly advertising revenues, reported $4.78 billion revenue in Q4, up 41% year-over-year.

Elsewhere, specific business showed strong growth. Prime, its delivery and video service crossed 150 million paying customers. The Prime numbers (100 million in 2018), seem to show that the company is looking to overseas markets as its core US audience saturates.

“At the end of 2019, we are very happy with our top line growth … (and) our adoption and acceptance from customers,” Amazon CFO  Brian Olsavsky told analysts in a post results call.

Among its Q4 highlights, Amazon's booming India business earned multiple mentions, including plans to invest $1 billion to help digitise traders and micro, small, and medium-sized businesses (MSMBs) across India, with the goal of bringing more than 10 million MSMBs online by 2025.

The release noted there are more than 550,000 sellers on the Amazon India marketplace, more than 60,000 Indian manufacturers and brands are exporting their “Make in India” products to customers worldwide on Amazon, and the firm expects its new $1 billion investment to enable $10 billion in cumulative Indian exports by 2025.

The company’s ambitions in India and its special recognition in the Q4 earnings come on the back of a growing regulatory conflict that saw founder and CEO Jeff Bezos unable to snag a meeting with India’s political establishment—with ministers questioning the company’s gung-ho attitude.

The earnings release went on to note that since launching amazon.in in 2013, Amazon has created more than 700,000 direct and indirect jobs in India, with further plans to create an additional one million jobs in India by 2025. Amazon's new campus building in Hyderabad is the company's first fully-owned campus outside the United States and the largest building globally in terms of employees and space, the company added.

(This article first appeared on CampaignAsia.com)

Campaign India

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