Note - for our preview on Amazon's Q4 report check here
Drum roll please....
Tuesday (January 31, 2012), Amazon reported Q4 results and Wall St. puked all over them (second Q in a row, I might add) sending the shares down 10-12% flirting with a new 52week low.
If you read some of the press, it sounds like gloom and doom -Amazon is making all these investments and they aren't paying off! OMG the sky is falling!!! I think what's happening is the mainstream press isn't understanding the big shift in this Q - 3P surged and skewed the results (top line - down and bottom line - up) and for me that's actually a positive movement on many levels (both for Amazon and 3P sellers).
I think we'll look back on this Q as an important tipping point in the evolution of Amazon -the mix shift to 3P continues to change them from a retailer to a technology company and marketplace operator. Given that weighty prediction, I wanted to spend a fair amount of time digging into the Q with our usual third-party (3P) focus, because it was a very important Q in that regard and gives us some clues to the mysterious missing $1b+ in Amazon revenue for the Q...
Note: for this post, unless explicitly called out - everything is what is know as ex-fx - it factors OUT any changes due to currency changes.
Amazon's Q4 Results vs. Expectations
Here is a snapshot of Amazon's key metrics for the Q vs. both their earlier guidance and Wall St. expectations: (click to enlarge)
From this table you can clearly see that revenue missed wall St expectations by about $1b and the bottom line exceeded (hmm, you'd think that wall st. would want expanding margins -but I suppose they want revenue growth and expanding margins).
Other highlights were:
- Amazon announced they now have over 2m seller accounts
- They introduced an exciting new metric - Service Sales. this seems to include 3P, AWS and advertising revenues - we're going to dig into this metric in the future, but Amazon announced it grew 74% which is good. This metric seems to be Amazon giving a bit of a peek into how rapidly MP/AWS/etc. are growing.
- Prime instant video streams increased a whopping 300% - I think my family accounted for about half that growth ;-)
- Amazon added 17 FCs globally in 2011
- Kindle unit sales were up 177% y/y - that's almost a triple folks.
- The category mix shifted hard to EGM - 63% EGM and 34% media - I remember when this was 50/50 just about 18 mos ago!
- Number of employees was up 67% to a whopping 56,200 - it was 33,700 year ago - wow - that's a lot of new Amazonians. They did say on the call the majority of these were in call center and DC or 'retail ops' type roles which makes sense.
- Paid units grew 46% vs.