In a strong finish to the year, Amazon easily beat Wall Street estimates as sales in North America advanced to double digits and the region turned to profits.
Net income in the fourth quarter was $10.6 billion, or $1 per diluted share, versus $300 million, or three cents per diluted share, in the year-previous quarter.
Amazon topped a MarketBeat-published analyst consensus estimate, which estimated earnings of 81 cents and revenues of $165.96 billion.
Fourth quarter 2023 net income includes a pre-tax valuation loss of $100 million from the company’s common stock investment in Rivian Automotive, compared to a pre-tax valuation loss of $2.3 billion from the investment in the 2022 fourth quarter 2022, Amazon pointed out.
Fourth quarter net sales increased 14% to $170 billion versus $149.2 billion the year-before period. With a $1.3 billion favorable impact from year-over-year changes in foreign exchange rates excluded, the company reported that net sales advanced 13%. Operating income was $13.2 billion versus $2.7 billion in the 2022 quarter.
North American segment sales increased 13% year-over-year to $105.5 billion, while international segment sales advanced 17% year-over-year to $40.2 billion or 13%, excluding changes in foreign exchange rates, the company reported. On the B2B side, AWS segment sales gained 13% year-over-year to $24.2 billion versus the prior-year period.
North American segment operating income was $6.5 billion, compared with an operating loss of $200 million in the 2022 quarter, while the international segment operating loss was $400 million, compared with an operating loss of $2.2 billion in the year-earlier period. AWS operating income was $7.2 billion versus $5.2 billion in the year-past quarter.
For the full year, net income was $30.4 billion, or $2.90 per diluted share, versus a net loss of $2.7 billion, or 27 cents per diluted share, in the year previous, including a 2023 pre-tax valuation gain of $800 million from the common stock investment in Rivian Automotive versus a pre-tax valuation loss of $12.7 billion from the investment in 2022.
Net sales increased to $574.8 billion in 2023 from $514 billion in 2022. Operating income was $36.9 billion versus $12.2 billion in the year before.
North American segment sales increased 12% year-over-year to $352.8 billion, while international segment sales increased 11% to $131.2 billion and AWS segment sales increased 13% to $90.8 billion. North American segment operating income was $14.9 billion versus $2.8 billion in 2022, while the international segment operating loss was $2.7 billion versus an operating loss of $7.7 billion the year earlier. AWS segment operating income was $24.6 billion versus $22.8 billion in the year past.
In a conference call, Andy Jassy, Amazon’s CEO, pointed to Martha Stewart home products as among the highlights of its assortment. He also heralded the introduction of Rufus, a new generative AI-powered conversational shopping function. The company designed Rufus to tap its product catalog and information from across the web to answer customer questions on shopping needs, products and comparisons, as well as to make recommendations based on this context.
Other fourth-quarter business highlights included, according to Amazon:
- Mounted a record-breaking Black Friday and Cyber Monday holiday shopping event, with customers buying over 1 billion items.
- Increased the number of items delivered through same-day delivery sites on the same day or overnight by more than 65% year-over-year.
- Entered a strategic partnership with Hyundai to begin online vehicle sales in the U.S.
- Introduced new advertising tools to help brands connect with customers and grow their businesses, such as a generative AI solution to help them produce lifestyle imagery that can make advertising more engaging and productive.
- Initiated a sponsored TV offering that enables U.S. marketplace sellers to run streaming TV ad campaigns with no minimum spend on Amazon Freevee, Twitch and third-party streaming services via Fire TV apps.
- Added 15 new advertising capabilities, including enhanced audience insights and campaign planning, as well as activation and optimization controls that help advertisers reach relevant audiences more efficiently and drive meaningful business outcomes.
- Launched Sequoia, a new robotics system that enables the company to identify and store inventory up to 75% faster and, when integrated with other technologies, reduce order process time by up to 25%.
- Announced new renewable energy projects, including the company’s first brownfield solar project, one that will repurpose a previously polluted Maryland coal mine site into a solar farm, as well as its first U.S. fulfillment center to eliminate plastic delivery packaging and replace it with paper packaging that is curbside recyclable, part of a multi-year plan to convert U.S. fulfillment centers to paper packaging.
In the conference call, Jassy noted the Rufus rollout is only a start that Amazon will build on to make the function more effective while enhancing personalization across the customer shopping trip. He added that Amazon intends to keep focusing on GenAI and investing in it as the company uses the technology to reinvent customer experiences and processes and, going forward, drive tens of billions of dollars of revenue over the next several years.
In announcing the financial results, Jassy said, “This Q4 was a record-breaking Holiday shopping season and closed out a robust 2023 for Amazon. While we made meaningful revenue, operating income, and free cash flow progress, what we’re most pleased with is the continued invention and customer experience improvements across our businesses. The regionalization of our U.S. fulfillment network led to our fastest-ever delivery speeds for Prime members while also lowering our cost to serve. AWS’s continued long-term focus on customers and feature delivery, coupled with new genAI capabilities like Bedrock, Q and Trainium have resonated with customers and are starting to be reflected in our overall results. Our advertising services continue to improve and drive positive results. Our newer businesses are progressing nicely and, along with our more established businesses, collectively making customers’ lives easier and better every day. As we enter 2024, our teams are delivering at a rapid clip, and we have a lot in front of us to be excited about.”
