American e-commerce and cloud computing company, Amazon Inc., announced its holiday season profit to be around $2 billion, the largest gain in its history. The surge in sales is mainly due to its highly-successful holiday shopping season and to the cash windfall stemmed from the recent US tax law.
Amazon shares surged 6 percent in extended trading, after previously closing down 4 percent on the Nasdaq index.
Company shares topped analyst forecasts of $1.83 to $3.75, or $2.15 minus the impact of the jobs bill.
The Seattle-based company enjoyed a 38 percent sales jump in December which amounted to $60.5 billion in profits. Net income was twice as high, having reached $1.9 billion from $749 million in the fourth quarter of 2016. The rise was helped by a $789 million provisional tax benefit from the recent Republican tax bill.
Amazon makes its capital by fast shipping, television shows exclusive to its website, and various endeavors into new tech, including its voice-controlled Alexa devices. More so, the company said price cuts from their recently acquired Whole Foods Market are boosting grocery sales as well.
“The retail strength was eye-popping as the company had a banner holiday season and looked to capture roughly 50 percent of all e-commerce holiday season sales.” Said GBH Insight analyst, Daniel Ives.
In 2017, Amazon managed to amass $177.9 billion in sales, a 31 percent increase from the previous years. Operating profit, however, reportedly dropped 2 percent to $4.10 billion for the year.
For the current March quarter, the company predicts its sales will jump 34 percent to 42 percent from last year’s profits. Its operating profit was also estimated to be much lower at $300 million to $1 billion.
Amazon’s fast delivery helped them obtain big gains thanks to their easy accessibility. Also, the Prime Now service saw more than 4 million new users in one week last quarter. Revenue from subscription fees grew 49 percent to $3.2 billion, according to Amazon.
Ad revenue is expected to rise once more as the company recently upped the fee for month-to-month Prime plans, affecting an estimated 30 percent of subscribers. An estimated 60 million US households are believed to have Prime subscriptions. Advertising and other revenue surged 62 percent to $1.74 billion.
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