Amazon has announced that its sales for the year 2018 have hit record breaking levels joining a small group of companies that are making hundreds of billions of dollars in revenue. The e-commerce giant has stated on Thursday that sales for the holiday quarter last year hit $72.4 billion.
This was a 20% jump compared to the same period the previous year. The strong end of year performance pushed the company’s sales for the year to $232.9 billion, a new record in its history.
Despite the record-breaking performance, growth is slowing. For instance, the 20% jump in the final quarter of 2018 was significantly less compared to the 38% growth recorded at the same time the previous year. Forecasts for the first quarter of 2019 are also lower than expected.
The company is looking at sales of between $56 and $60 billion. This would represent an annual growth rate of between 10% and 18%, one of the lowest recorded in recent years.
But even with the slowed growth, profits for the company are over the roof. In the final three months of 2018, the company was able to record at least $3 billion in profit. Amazon has also managed to hit $1 billion in profit for the last five consecutive quarters. Total profits for the year 2018 stood at $10 billion. This was the first time the company managed to surpass the $10 billion mark in profitability and it doesn’t look like it’s going to slow down.
The profitability has been fuelled by a number of factors. However, the high margin cloud computing service has been one of the most important drivers of growth and profitability in recent years. Amazon Web Services is a leader in the cloud computing niche and the service reported a 45% growth in 2018 hitting $7.4 billion in revenue. This came even as Amazon faces fierce competition from other top cloud computing service providers such as Microsoft. Microsoft Cloud has remained one of the most successful providers in this area with sales hitting $25 billion last year.
Experts believe though that the most important metric to focus on right now is the profitability. A string of five consecutive quarters with profits of above $1 billion is no easy feat, especially when you consider that the company has invested a lot of its profits back to the business. For instance, the e-commerce giant has expanded physical locations around the US substantially.
The company is also investing heavily on original content for its Amazon Prime streaming service. Amazon has said that it will be increasing the minimum wage for all its workers to $15 an hour.
The company already has a total of 250,000 employees and an additional 100,000 seasonal ones.
Performance in the stock markets at the start of 2019 wasn’t that bad either. Amazon stocks were up by 10% for the first four weeks of the year. The earnings report, however, did hamper some of this progress. Stocks plunged 5% but they’re expected to rebound in the coming few weeks.
Amazon is among the three major tech giants in the US that are racing towards $1 trillion in valuation too.
