Amazon reported lower than expected revenue while beating expected earnings for the fourth quarter of 2016 ended December 31st, 2016.
Revenue and forward guidance fall short
Amazon’s net sales reached $43.7 billion USD compared to analyst expectations of $44.68 billion. This is compared to $35.7 billion at the end of the fourth fiscal quarter of 2015.
Net income for the quarter reached $749 million or $1.54 per diluted share compared to a net income of $482 million of $1 per diluted share during the fourth quarter of 2015.
The company also released its annual earnings report for the full 2016 year. Revenue for the year increased by 27 percent to $136 billion. Net income for the full year was $2.4 billion compared to a net income of $596 million at the end of the 2015 fiscal year.
Despite reporting earnings that surpassed analyst estimates, the company’s overall revenue and forward estimates both fell short. Since releasing its results after the market closed on February 2, Amazon’s shares have fallen by 3.5 percent.
Entering new markets
Over the past few months, Amazon has invested heavily in research and development projects, including improvements to its digital assistant Alexa, high tech upgrades to its delivery and logistics service as well as other futuristic projects.
In addition however, Amazon’s content ambitions seem to be paying off. Amazon introduced Prime Video to customers in over 200 countries and territories around the world, including Canada. In addition, Amazon Studios was also nominated for seven academy awards and 11 Golden Globes.
CEO Jeff Bezos went on to explore the benefits of Prime services over the past year.
“Our Prime team’s customer obsession kept them busy in 2016. Prime members can now choose from over 50 million items with free two-day shipping — up 73 percent since 2015. Prime Video is now available in more than 200 countries and territories. Prime Now added 18 new cities, which means millions more members now get one and two hour delivery,” said Bezos, Amazon founder and CEO, in a statement.
He continued to say that several new services were recently added to Prime, which in turn, drew in more customers.
“New benefits were also added to the list, like Prime Reading, Audible Channels for Prime, Twitch Prime and more. And customers noticed — tens of millions of new paid members joined the program in just this past year.”
New ventures see continued success
Amazon’s digital assistant Alexa made huge strides over the past year to become what many would consider the world’s most advanced AI assistant. With over 4,000 skills developed by tens of thousands of developers since October alone, products featuring Alexa have engaged customers in ways no other smart device has before.
Alexa-enabled devices were also the top selling products across all categories on Amazon this holiday season.
Amazon Web Services, which many pundits were predicting would prove to be a successful model in its own right, barely missed analyst expectations at $3.53 billion.
The division has grown to become the backbone by which businesses around the world now access cloud computing services.
Amazon’s forward looking estimates expect revenue to fall between $33.25 billion and $35.75 billion for the first fiscal quarter of 2017.