Amazon Published Impressive Earnings and Announced Higher Prime Fee

Amazon Published Impressive Earnings and Announced Higher Prime Fee

Amazon published an impressive first earnings call of 2018 which saw the Amazon stock soar in after hours. At the same time, the company CFO announced that they will increase the membership fee for Prime customers.

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No one was surprised to find out that Amazon had been doing well over the past three months, especially not since adding Whole Foods to the company’s revenue in late 2017. However, no one had expected the company’s quarterly report to be as impressive as it was and it made the Amazon stock surge by 7% in after hours.

Here are the most important numbers from the Amazon earnings call compared to Reuters estimated numbers:

  • Estimated revenue: $49.78 billion compared to actual revenue: $51.04 billion
  • Estimated earnings per share (EPS): $1.26 compared to actual EPS: $3.27
  • Amazon Web Service’s revenue was estimated by FactSet to reach $5.25 billion but it made it to $5.44 billion.

On a year-to-year basis, Amazon’s revenue has increased by almost 45 percent with an overall increase of 46 percent in North America alone. All predictions anticipate further growth for Amazon during 2018.

Amazon Is Also Raising the Fee for Its Yearly Prime Plan

At the same time as the Amazon quarterly report was published, the company CFO, Brian Oslavsky, announced that Amazon is raising the price of a Prime membership from $99 to $119 per year. Oslavsky explained that the higher price will help Amazon meet increasing costs and offer a better service to their customers.

“The value of Prime to customers has never been greater. And the cost is also high, as we pointed out especially with shipping options and digital benefits, we continue to see rises in costs. So effective May 11, we’re going to increase the price of our U.S. annual plan from $99 to $119 for new members,” Oslavsky declared in his statement.

The new price is the first increase to the Prime plan since 2014. The Prime plan provides members 2-day shipping and access to Amazon’s streaming service.

Just a few weeks ago, Jeff Bezos sent out his annual shareholder letter where he proudly announced that Amazon has over 100 million Prime customers world wide, meaning the new price will give the company close to $2 billion in additional revenue. 

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