SEATTLE – Amazon on February 2 reported revenue of $149 billion for its fourth quarter, beating estimates with a 9% increase from a year earlier.
But profits declined 98% year on year to $278 million due to higher costs and expenses that included charges related to its layoff of 18,000 employees, a pre-tax valuation loss attributed to the company’s investment in electric vehicle maker Rivian, and pullbacks in parts of its business, including its primary health care business, AmazonCare.
“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” Andy Jassy, the company’s chief executive officer, said in a statement.
Jassy joined the company’s earnings call for the first time, a function that his predecessor, Jeffrey Bezos, typically left to chief financial officer Brian Olsavsky.
Olsavsky said on the call that Amazon is pleased with its fourth quarter and is “cautiously optimistic” about the year ahead, despite pullbacks in consumer discretionary spending.
Fourth-quarter revenue from brick-and-mortar stores was $4.9 billion, representing a year-on-year increase of 6%. Olsavsky said the company is taking a hard look at Amazon Fresh and Amazon Go stores with low growth potential, and it might decide to exit some of the locations.
Revenue from its online retail operations declined 2% to $64.5 billion, though Jassy said in the earnings release that demand in the category exceeded the company’s expectations.
Revenue at Amazon Web Services, the company’s cloud business, increased 20% from a year earlier to $21.3 billion, That’s down from 40% growth in the comparable period a year ago.
Advertising generated $11.5 billion in revenue in the fourth quarter, an increase of 19% from a year ago
Jassy said that reducing fulfillment costs is a top priority after the company’s North American stores segment posted a $2.8 billion loss for the full fiscal year, which he attributed to the doubling of the company’s fulfillment footprint over the past couple of years “to roughly the size of UPS.”
Added Jassy, “We’re trying to build a set of relationships and business that outlasts all of us.”
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