Babar Khan Javed
Feb 5, 2018

Amazon achieves eleventh quarter of profitability

Amazon's advertising division has crossed the billion-dollar revenue mark, placing it in conflict with Google and Facebook as the market leader for ad spend towards the conversion funnel.

Amazon achieves eleventh quarter of profitability

Achieving its 11th profitable quarter in a row by recording net profit of $1.9 billion on revenue of $60.5 billion, Amazon has grown year on year by 38%.

Operating income surged 69% to $2.1 billion and the net profit number was 154% above the same quarter in 2016. The results include a provisional tax benefit for the impact of the US Tax Cuts and Jobs Act of 2017 of approximately $789 million.

Amazon’s full-year net sales increased 31% to $177.9 billion, compared with $136.0 billion in 2016.

Amazon Marketing Services (AMS) is a key contributor to the company's strong growth, with analysts from Raymond James estimating that the revenue channel generated $1.6 billion, up by 50% over 2016.

In presenting the company's results, CFO Brian Olsavsky praised the service, which offers listed Amazon vendors the ability to help prospects find new products and drive sales on the platform.

Primarily offering targeted CPC advertising solutions, AMS allows merchants to headline search ads and sponsor product ads, ushering a customer experience that is enhanced by the ads since site visitors are at the end of the buyer decision journey.

Pressed by analysts, Olsavsky said that AMS as an offering would be a key focus in 2018 and introduce improvements that grow its value to advertisers and agencies in driving brand awareness, product discovery, and smarter segmentation.

Cloud computing

Beating the expectations of analysts, Amazon Web Services (AWS) contributed $5.11 billion for Q4 2017, another revenue stream singled out by the CFO as being a key focal point for 2018.

Regarded as a cash cow that competes with Alibaba, Google, Microsoft, and IBM, the service generated $17.46 billion in 2017, representing 10% of Amazon's total revenue.

A highly commoditised offering, cloud computing providers compete primarily on price, with Amazon extending the shelf life of the service by helping developers with AI services.

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