Amazon operating profit halved, clean – doubled. How did that come about?

Операционная прибыль Amazon упала вдвое, чистая — вдвое выросла. Как так вышло

Company Amazon published results for the fourth quarter of 2021. The retailer once again announced rising operating costs, and also about successful investments in one of the manufacturers of electric cars.

Compared to Q4 2020:

  • total revenue — $137.4 billion (+9%);
  • operating profit — $3.5 billion (−50%);
  • net profit — 14.3 billion dollars (+98%).

Here's what impacted each of these financial numbers.

total revenues

Amazon's quarterly revenue for the first time in many years grew by less than 10%. And one of the reasons is the high base effect.. In 2020, the retailer made good money on the pandemic: then quarterly revenues grew by about 40%.

And here is how revenues in operating segments have changed:

  • North America - marketplace commissions, Amazon Prime subscriptions, advertising and other in North America - $82.4 billion (+9%);
  • International - all the same, but in other countries - 37.3 billion dollars (−1%);
  • Amazon Web Services - cloud service - $17.8 billion (+40%).

As before, the main driver of sales growth was the AWS cloud business. The company also saw an increase in advertising revenue., which have increased by 32%, up to $9.7 billion. It's at the level of Google — 33% — and much better, than Meta 20%. Both companies also reported this week.

According to Amazon, in the first quarter of 2022, total revenue will grow by about 6%, up to 112-117 billion dollars. This is below analysts' expectations of $120 billion..

Operating profit

Due to supply disruptions and rising labor and logistics costs, Amazon's operating profit has halved, with 7 to $3.5 billion. The company warned about this last quarter..

Operating profit of each segment:

  • North America - $0.2 billion;
  • International - $1.6 billion;
  • Amazon Web Services - $5.3 billion.

Same as last quarter, the main business of the company showed a loss, and all operating profit came from cloud AWS. According to Amazon, in the first quarter of 2022, operating profit will be from 3 up to $ 6 billion - against $ 9 billion a year earlier.

Net profit

Like the operating room, Amazon net profit should have decreased by several tens of percent. But profits have risen, and twice, because the company sold Rivian papers at a profit. This automaker with investments from Amazon and Ford held an IPO 10 November 2021. It was the non-operating component that accounted for a large share of Amazon's profit - approximately 11.5 of $ 14.3 billion.

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What about stocks

At the postmarket, Amazon securities have grown by 14%, to 3172 $. Such dynamics are difficult to explain., as the company's revenue growth continued to slow, retail business in a pandemic also shows a loss, and the profit from the sale of shares is only a one-time item. apparently, investors decided to close their eyes to all this and focus on AWS, which still pulls the whole company.

Операционная прибыль Amazon упала вдвое, чистая — вдвое выросла. Как так вышло

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