Amazon Posts Record Results, As Prime Video Catches Netflix

Amazon’s latest financials is another sign the shift towards online shopping is not slowing down, as countries such as the UK and US emerge from Coronavirus lockdowns.

Amazon’s first quarter results are remarkable as profits rose by 224 percent, and revenues grew 44 percent compared to the same period a year ago.

Amazon Web Services continues to enjoy strong growth, but Prime Video is also knocking on the door of its rival Netflix in terms of viewers.

Strong financials

For the first quarter ending 31 March, Amazon posted a net profit of $8.1 billion, up 224 percent from the $2.5bn profit in the same year-ago quarter.

And the good news continued in revenues, after Amazon posted sales up 44 percent at $108.5bn from $75.5bn a year earlier.

These results have been boosted by strong performance in both Amazon’s e-commerce operations and growth for Amazon Web Services (AWS).

Indeed, for the quarter AWS posted revenues of $13.5 billion, up 32 percent year-over-year.

That growth has been driven as more companies opt for cloud services to help manage hybrid workforces spread across home and office locations.

“Two of our kids are now 10 and 15 years old – and after years of being nurtured, they’re growing up fast and coming into their own,” said Jeff Bezos, Amazon founder and CEO. “As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70 percent year over year.”

“In just 15 years, AWS has become a $54 billion annual sales run rate business competing against the world’s largest technology companies, and its growth is accelerating – up 32 percent year over year,” said Bezos. “Companies from Airbnb to McDonald’s to Volkswagen come to AWS because we offer what is by far the broadest set of tools and services available, and we continue to invent relentlessly on their behalf. We love Prime Video and AWS, and we’re proud to have them in the family.”

Netflix challenger

The rare insight from Bezos about number of Prime Video subscribers is noteworthy, as he confirmed Amazon now has more than 200 million paid Prime subscribers, which is 50 million more than it had at the start of 2020.

It should be noted that Netflix also has 200 million subscribers.

And streaming hours on Prime Video are up more than 70 percent year-over-year, in another sign of its growth during the Coronavirus pandemic, that forced people to remain in their houses for over a year and half.

Earlier this week Amazon also revealed that it would spend $1 billion to raise wages for more than 500,000 hourly workers by as much as $3 an hour, as it continues its hiring push that has elevated its global workforce beyond 1.3 million people globally.

The company will not, however, increase its $15 per hour minimum wage.

Earlier this month, Amazon roundly defeated a high-profile effort to unionise a warehouse in Alabama, following a months-long campaign against the unionisation drive.

But this week the National Labor Relations Board warned that evidence submitted by a retail union over Amazon’s alleged conduct at the union election in Alabama “could be grounds for overturning the vote.”

No slowdown

Meanwhile an outside expert noted that Amazon’s latest financials have not shown any growth slowdown as economies and high streets open back up, post pandemic.

“Investors were wondering if Amazon’s growth would slow as economies start to re-open and shops get back to business as usual,” said Martin Garner, COO at market researcher CCS Insight.

“There was no sign of that yet in Amazon’s 1Q21 earnings with revenue up 44 percent and continuing to accelerate, driven by strong growth in ecommerce and in its cloud services,” said Garner. “This was despite the lack of a Prime Day in the quarter to boost sales.”

“Amazon Prime Video is now 10 years old and saw 175 million users during the last year, starting to get close to the numbers Netflix has achieved,” said Garner. “Prime video is a key benefit for Prime members, and Amazon is continuing to invest heavily in original content as well as in sports rights to expand the catalogue.”

“AWS is 15 years old and is now a $54 billion per year business, growing consistently at over 30 percent per year,” added Garner. “After a slight slowdown in the pace of growth during the pandemic, in which troubled businesses offset increased adoption of cloud services, stronger growth has resumed. This is driven by an increased pace of digitalisation across most sectors and by some badly hit sectors starting to build their business back up.”

“Amazon invested just under $2 billion in a range of measures to protect staff from Covid-19 during the first quarter, including a vaccination programme,” noted Garner. “It sees this continuing worldwide for some time, with a further $1.5 billion expected during Q2.”

“During the last year, the company’s staff have been seen as front line workers, playing a major role in helping the world deal with the pandemic,” added Garner. “Alongside these essential investments, Amazon is keen to burnish its reputation as an employer, citing its position at #1 in the US on LinkedIn’s 2021 Top Companies list, although there is also a steady drum-beat of negative stories about working conditions at the company.”